Economic gains from India free trade deal modest to begin with - MFAT

The New Zealand economy is expected to be hundreds of millions of dollars better off each year once the Indian free trade agreement has fully come into force.

Analysis of the economic benefits of the deal has been released along with the full text.

While many Indian import duties are gone from day one, some key sectors will have duties phased out over 10 years.

Economic modelling for the Ministry of Foreign Affairs and Trade said once fully implemented in 2037, more than 80 percent of exports to India would be duty free.

The Ministry noted that "given the current income and consumption profiles of India, and that increases in trade are off a very low base, the initial gains from the FTA were modest.

"By 2037, approximately 10 years after entry into force when all tariff phasing is complete, annual GDP (in 2024 dollars) is expected to be 0.07 percent $401 million higher than non-FTA baseline GDP," the National Interest Analysis report said.

Trade expert Stephen Jacobi said while the agreement is unlikely to match the immediate gains of the China FTA, it is still a welcome boost for exporters and for economic growth.

"You have to think about what the world is today, it is not easy to get these agreements, the world is closing up, India is the last big one out there assuming we never get one with the United States," he said.

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