While Prime Minister Christopher Luxon’s visit to India is still in its early stages, one thing is already clear, it appears Luxon has decided to hit the reset button, clearing the cache as it were. He announced that New Zealand and India have agreed to ‘launch’ negotiations on a comprehensive free trade agreement.
The use of that word denotes resolve and purpose to begin with a clean slate, without the baggage of past trade negotiations (and hopefully stodgy, old geopolitical stances).
This is not just about reinvigorating trade ties; it is about recognising the shifting geopolitical landscape and embracing a more pragmatic approach to diplomacy and commerce. For far too long, New Zealand has lagged behind in its engagement with India, watching from the side lines as other nations—especially Australia—deepened their economic and strategic relationships with the world’s fastest growing economy.
When almost every major economy in the world has reaped the benefits of India’s spectacular rise, New Zealand’s trade relationship with India has gone in the opposite direction. Over the past decade, two-way trade has actually declined, despite India’s economic boom. After peaking at NZ$2.66 billion in 2011, trade between the two countries dropped sharply, falling below NZ$2 billion by 2019 and stagnating through much of the past decade. There has been some resurgence in the past year, but this is catch-up, not progress.
Why has New Zealand fallen so far behind? A major turning point was the collapse of free trade agreement (FTA) negotiations in the 2010s after ten rounds of talks. While the Labour government let the momentum fizzle out, other countries—including Australia—took a different approach. They moved beyond the narrow FTA framework and pursued alternative avenues for trade and diplomatic collaboration.
Now, with Luxon’s delegation on the ground, New Zealand has an opportunity to rebuild the relationship from scratch—not by revisiting old strategies but by taking a fresh, pragmatic approach.
New Zealand must accept certain realities: India is not interested in dairy imports, a sector that dominates New Zealand’s trade ambitions. This was a no-go zone in the past, and it remains one today. Instead of pushing on closed doors, New Zealand needs to focus on areas where real opportunities exist—technology, education, agritech, and renewable energy. Scale matters. New Zealand, as a small nation, does not offer the kind of market scale that India seeks. However, what it does offer is access to the Pacific—an increasingly important region in India’s Indo-Pacific strategy.
This is where New Zealand must catch up with the geopolitical realities of the Indo-Pacific region. Australia understood the importance of the Indo-Pacific concept almost a decade ago and integrated it into its official foreign policy lingo and trade strategies early on. New Zealand, by contrast, has been slow to even adopt the term, let alone leverage it strategically. Long after western nations had moved to ‘Indo Pacific’, NZ still preferred ‘Asia Pacific’. It is when ‘Asia Pacific’ was virtually dumped from geopolitical discourse that NZ began using ‘Indo-Pacific’. All this may seem trivial but it is not. It is an important signal in geopolitical parlance.
It is no coincidence that Australia has taken a significant lead over New Zealand in its relationship with India. Canberra has positioned itself as a reliable Indo-Pacific partner, aligning its interests with India’s broader regional vision. Meanwhile, Wellington has largely stuck to its traditional, more idealistic foreign policy outlook, hesitating to take the necessary geopolitical stances that would make it a more attractive partner for India.
The hard reset that Luxon’s visit provides is not just about trade deals—it’s about New Zealand finally acknowledging and embracing its place in the Indo-Pacific strategy. India is deeply invested in shaping the Indo-Pacific narrative, and New Zealand’s strong ties with the Pacific Islands could be a valuable asset in this equation.
New Zealand can no longer afford to sit on the side lines while other countries deepen their ties with India. This visit is a chance to restart the relationship on new terms—but only if Wellington is willing to change its approach holistically. The days of viewing trade in isolation are over. In today’s world, trade and geopolitics are intertwined, and New Zealand must position itself as a serious player in the Indo-Pacific region.
ISSUE
