India & NZ: The Relationship Reset

A new report from the India-New Zealand Business Council has been released  – outlining the strategies the Council and its members believe are needed to take New Zealand to a new level in its relationship with India.

The Asia Media Centre takes a look at the issues around the India relationship, and how New Zealand might move forward.

The India New Zealand Business Council (INZBC) plays a critical role in enhancing trade and investment ties between India and New Zealand.

The council has been working hard in the post-pandemic environment to bolster economic relations between the two countries, and further foster a business-friendly environment for companies seeking to establish or expand in both markets.

Its latest research on the India-New Zealand relationship, based on responses from members across the country,  picks up on a comment from Indian Foreign Minister S. Jaishanker, who told audiences in New Zealand last year that the NZ-India relationship is “ready for its next phase.”

The report emphasises the importance of a strong India-New Zealand relationship as being vital for this country’s future.

But it also addresses is the “special” nature of the India relationship, and just how it requires a different approach from the government and business sectors.

Fifteen years of talking with India has not delivered the Free Trade Agreement (FTA) that many in New Zealand might desire. That situation looks unlikely to change under the current Modi administration in India, which looks set to continue after the general elections next year.

Meanwhile, the IMF is now tipping India to be the world’s fastest-growing economy in 2023, with GDP expanding by 6 percent. Later this week India’s population will exceed that of China, with a significant number of people still living below the poverty line, and continuing issues around employment and public services like health and education.

Protecting small business is a huge part of the Indian government agenda on trade.  Image: Graeme Acton

Two-way trade between India and New Zealand has dropped markedly since 2017, from $2.8 billion to $2.3 billion.  

Instead of an endlessly frustrating FTA process, the INZBC says the focus must urgently turn to the wider relationship, the non-transactional bilateral relationship, involving trade, but also leaning towards the other ties that bind India and New Zealand: culture, history, sport, migration, and others.  

So how do India-watchers in New Zealand see the current state of play?

The Asia Media Centre spoke to a handful of India experts, to gauge their views on the state of the relationship, and how New Zealand can best advance its interests. 

Susannah Jessep is Director of Research and Engagement, Asia New Zealand Foundation

“The Asia New Zealand Foundation would agree that there needs to be a new approach, a non-FTA approach. But one that looks deeply at how we can build trust, and strips away some of the recurring irritants in the relationship, which really are just about us managing things more effectively, like immigration and diplomacy.”

“In 2022, when the Asia New Zealand Foundation brought together 120 of New Zealand’s leading voices on Asia for our “Seriously Asia Revisited” initiative. One of the recurring themes was why NZ is not invested in building its relationship with India given the areas of shared interest. I think it was clear to everyone that the necessary energy and resource hasn’t been applied to the relationship.”

“One of the problems has been the fact that we apply very limited resources to the relationship, and we have very low levels of knowledge , and to grow the relationship we first have to deepen our expertise and understanding of India, allowing us to see better where the areas of strategic overlap are . At the moment we can’t judge that very well.”

“The relationship – and this applies across Asia – has to be more than just “we want to sell you stuff.” Governments typically declare they want to secure an FTA, send diplomats out with that objective, who are arguably being set up to fail, because unless you put the resources around that effort you can’t succeed.”

“Australia got a partial FTA across the line because it came of the back of several years of intense relationship-building. The commitment and trust were developed, and then the trade relationship became possible.”

Sekhar Bandyopadhyay is Emeritus Professor of History at Victoria University in Wellington, he is also founding Director of the New Zealand India Research Institute.

“India has signed numerous FTA’s and is negotiating more at present, and Delhi is realising they can’t avoid FTA’s – but these aren’t blanket agreements, they are very targeted to selected products, often regarding goods that aren’t produced in India.”

“I’ve always felt India is not comfortable with blanket agreements as there is a strong opposition to opening the agricultural market. But NZ could easily avoid those roadblocks and look at other sectors of mutual benefit. I think NZ needs to convince India of the value proposition in those areas , and New Zealand has to be very clear what it wants in its negotiations with India ."

"The other thing is that there are other aspects of the relationship – I think NZ needs to look carefully at what it can offer, because there will have to be a quid pro quo."

“For example if you look at the Australian FTA, Australia has made concessions on immigration regarding students , being given work permits after their education, and offering 1000 working holiday positions to India every year."

"New Zealand needs to think seriously about that kind of concession if it wants to progress the free trade agenda."

“Forty percent of India's population is now under 25, and a major problem is educated youth unemployment. India would like to see more young people going overseas to gain experience, and further education."

Dr Hongzhi Gao is Associate Professor in International Business at the School of Marketing and International Business at Victoria University of Wellington.

“New Zealand’s relationship with India is tricky, and while New Zealand has had some success with China as a trade partner, the situation with India is very different.

“Its a good diversification from China , but India is a different kind of market and a different kind of government.

“China is authoritarian, which means things can happen quickly in the economy, but India is a democracy, and there are other challenges which mean things maybe don’t move as fast.”

“Now, I’m no fan of authoritiarian regimes, but often countries with very strong centralisation do better in the trade space as they move fast, build infrastructure, develop industries, that sort of thing. Vietnam is a good example”

“We have to look at how India will perform in the future, but you could argue that countries in South East Asia are able to replicate the Chinese economic success far more easily than India can. China is rising partly because its close to Japan, South Korea and so on, and culturally there are similarities. But India has somehow break that bond, and it has the opportunity with nations in the Asia-Pacific like New Zealand”

“If New Zealand can be a little more pro-active with India as a partner to provide some balance to the influence of China in the region, that that would make sense.”

 “New Zealand can work with India in a number of areas – natural resources, labour resources and so on , but it will take India some time to catch up with China. New Zealand should get organised and keep pursuing the FTA, even though the actual deal may be largely symbolic.” 

Primary among the recommendations from the INZBC report this week is expected to be the reiteration of the call heard many times before on the India relationship – build a long-term strategy to engage with India across the board. Whether the current or future government has the vision and ability to take that strategy forward is another matter.

- Asia Media Centre