New Delhi, Aug 24 (IANS) India’s economic rise makes it a strategic partner for New Zealand, and the recently signed free trade agreement (FTA) between the two nations is expected to deliver significant gains, a new report has said.
A report from Australia-based Westpac Institutional Bank highlighted India’s scale and growth potential suggesting that the FTA could add close to 0.1 per cent to New Zealand’s GDP over the next decade.
“India is one of the world’s fastest-growing major economies and offers access to a market of 1.4 billion people – one fifth of the world’s population,” the report said.
Under the FTA, 95 per cent of New Zealand’s current exports gain tariff elimination or substantial tariff reductions.
Estimated tariff savings of around NZ$43 million annually from day one, rising to about NZ$62 million when fully implemented based on current trade levels.
The report called India a global economic powerhouse and is expected to become the world’s third-largest economy this decade due to rapid growth in incomes and consumer spending.
“Within five years, India’s middle class is expected to exceed the entire population of the EU or ASEAN. Increasing influence in global trade, technology, investment and geopolitics,” the institutional bank said.
The merchandise trade benefits are likely to be larger over time as India’s economy grows, even more so if – as seems likely – the FTA encourages proportionally greater trade with India.
“Importantly, benefits from the FTA extend beyond traditional merchandise trade to investment, services, tourism and education exports,” the report noted.
Further, the FTA also holds benefits related to strategic relations and economic diversification – especially important in the current geopolitical environment.
India is currently only New Zealand’s 10th-largest export market despite its economic scale. NZ exports remain concentrated in a relatively small number of markets, the report said, adding that diversifying reduces economic risk.
The benefits extend beyond tariff reductions and the agreement facilitates faster customs clearance procedures.
Indian customs have committed to releasing goods within 48 hours and to endeavour to release perishable goods within 24 hours, the report noted.
Most dairy products remain excluded from the agreement or subject to quotas and phased liberalisation.
—IANS
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