Economic Highlights

New Delhi, 29 December 2025

Car Sales’ Boom

TOXIC AIR TURNS A WINDFALL

ByShivaji Sarkar 

Scrappage is a profit accelerator. By some industry estimates, it can add 30 per cent or more to automaker profits, not through innovation but by forcing replacement, acquiring old cars cheaply, recycling-retrofitting their parts, and locking consumers into high-margin service and spare-part ecosystems. Pollution is the cover story; profit is the motive. 

Delhi’s air is “filthy”—but not for the reasons the government and the automobile lobby keep selling. The Tughlaqi GRAP curbson entry of cars thawing Delhi into chaosis dishonest. And that dishonesty conveniently channels policy, subsidies and public anger toward cars, consumers and scrappage—while the dirtiest culprits continue to billow away, largely untouched.It is being turned into an all-India scourge. 

While exact figures for “prospected old car parts” are scarce, the Rs 94,000 crore auto-industry significantly boost profits via high-margin new spare parts (often 15-90%+ margins vs. 4-10% on new cars), as cars with 40 plus-year life are junked in ten years. Post-scrap India's aftermarket booms, creating huge revenue in recycling/refurbishing. 

The Emissions Myth

The standard defence of vehicle scrappage is emissions compliance—Euro-VI versus older norms. In real-world urban, the difference in tailpipe emissions of Euro-I and Euro-VI vehicles rarely exceed one percent.Delhi’s air is shaped far more by construction dust, industry, coal-fired plants, crop burning and winter inversion. Cars are minor players. They are targeted as they arethe easiest to regulate—and the easiest to monetise.Even ultra-low sulphur Indian BS-VI diesel used since 2020 is the cleanest available globally, but being junked despite a higher fuel efficiency 

What the Science Actually Says

A Centre for Research on Energy and Clean Air (CREA) study shows nearly one-third of Delhi’s annual PM2.5 is ammonium sulphate—formed when sulphide oxide (SO₂) from coal plants reacts with ammonia—rising to almost 50 per centin winter smog. Duringpeak pollution, PM2.5 jumps to 49 per cent, versus 21 per cent in summer and monsoon, pointing to regional coal emissions, not vehicle exhaust. Much of India’s PM2.5 is chemically formed in the air from coal-linked precursor gases—yet coal remains politically untouchable, while cars are easy and profitable targets.The National Clean Air Programme (NCAP) fixated on PM10 and local sources, neatly sidesteps region-wide SO₂ coal emissions, 

Windfall: A Forced Market for New Cars

For automobile manufacturers, 10-year-new car scrappage is a windfall.The policy creates a captive, state-manufactured market for new cars. Owners are nudged—or forced—into replacement through bans, enforcement drives and a cocktail of “incentives”: scrappage certificates, road-tax rebates, and dealer discounts of around five per cent. 

What is presented as choice is, in reality, coercion with paperwork.This comes at a time when many households are already servicing seven- or eight-year EMIs on vehicles that are suddenly declared unfit. The state is accelerating depreciation to zero by decree and compelling repurchase at full market price. 

Cars Acquired for a Song

Vehicles are acquired for a fraction of their real economic value. A well-maintained car worth several lakh rupees in utility terms is reduced to scrap pricing, around Rs 20,000. Owners lose the asset; the ecosystem gains cheap raw material. 

Scrapped vehicles yield 65–70 per cent steel, 7–8 per cent aluminium, copper, rubber and plastics. This material flows from registered scrapping facilities straight back into manufacturing supply chains. For automakers, this means lower raw material costs, reduced reliance on virgin inputs, and a steady pipeline of recycled metals—while simultaneously boosting new vehicle sales. 

EVs, Subsidies, and Blind Faith

Alongside scrappage runs the government’s missionary push for battery electric vehicles, rolled out without serious evaluation of what happens after the showroom sale. Battery dumping grounds, recycling hazards, and age-bound end-of-life risks are treated as footnotes. Lithium-ion waste is someone else’s problem—preferably tomorrow’s. 

Lithium mining itself—from South America to Australia—is ecologically destructive, water-intensive and socially corrosive. Public discomfort—range anxiety, safety concerns, even reports of giddiness and health effects—is dismissed as anecdotal noise. 

NO₂: The Convenient Villain

Parallel to this runs the more coercive instrument: junking. Automobile and allied lobbies have suddenly discovered an unsubstantiated villain called NO₂ levels, now invoked to justify forcing functional vehicles off the road nationwide. The scientific basis is thin. The commercial payoff is enormous. 

Scrappage is not about clean air. It is about profit engineering.India’s auto aftermarket is already booming at ₹94,000 crore in FY24, and forced scrappage accelerates it. New cars generate service contracts, warranties, insurance tie-ins and years of high-margin parts sales, while older vehicles—served by independent mechanics and non-OEM parts—sustain a consumer-friendly parallel economy that scrappage efficiently erases. 

First,spare-parts margins: old cars repaired outside original equipment manufacturer (OEM) networks hurt profits, while new cars lock buyers into proprietary parts and service cycles, where margins jump from 7–10 per cent on vehicles to 15–90 per cent on spares. Second, recycled metal savings: scrappage delivers cheap steel and aluminium and even windshield and electronic chip under the banner of circular economy.

Third, EMI-driven forced demand: citizens are pushed into loans for forced purchases. Together, these incentives explain why pollution science is selectively framed to blame local dust rather than structural sources.EVs are subsidised despite unresolved environmental costs. Junking is rolled out nationwide under the banner of clean air for higher profits. 

A Circular Economy—for Whom?

Proponents sell this as a “circular economy”: old cars reborn as new. Environmentally neat, economically rigged. Consumers lose assets at distressed prices; manufacturers gain cheap inputs and guaranteed demand, while intermediaries flourish and the state collects fresh taxes. Sustainability language disguises a one-sided transfer. 

Enforcement worsens it. Barricades, spot seizures and discretionary checks turn commuting into coercion. Where discretion thrives, rent-seeking follows—harassment, selective targeting and quiet “settlements” included. 

The Real Elephant - Smog

The irony is brutal. Data show vehicular emissions are not the primary driver of Delhi’s worst pollution episodes. Yet cars are punished, consumers are moralised, and cities are ritualistically shut down. Coal, dung cakes—whose sulphur dioxide emissions chemically manufacture PM2.5 at scale—remains the elephant in the smog.This is not environmental policy. It is narrative management. 

The crisis is real. The framing is engineered. Citizens are asked to junk vehicles, take fresh EMIs, and feel virtuous about EV badges.India does not need more virtue signalling on wheels. It needs honest science, and reversal of age-bound forced car junking, a major drain on economy.---INFA 

(Copyright, India News & Feature Alliance)

Spotlight

New Delhi, 27 December 2025

India’s West Path

TO BREAK GEOPOLITICAL GRIP

By Piotr Opalinski

(Expert, Centre for International Relations, Poland) 

India’s increased involvement in Afghanistan and its consistent pursuit of developing cooperation with Iran and Central Asian states are part of a broader strategy for balancing a geopolitical environment increasingly shaped by China’s growing power. This pivot to the West is becoming a tool for overcoming asymmetries and a response to Chinese actions perceived as building a “ring” or “string of pearls” around India. 

In recent years, Beijing has strengthened its influence in India’s immediate vicinity: from Sri Lanka and Maldives to Bangladesh and Nepal. China’s trade with Bangladesh reached $17–22 billion, its share of capital in Lanka’s debt was 20%, and infrastructure investments in Nepal nearly doubled. Besides, Pakistan’s increasingly close cooperation with China—based on military and economic components, particularly related to development of China-Pakistan Economic Corridor --increased strategic pressure on India to the west and north. 

Delhi needs a strategic “second circle”: a space that will make its trade routes independent from its neighbours, increase its logistical resilience, and hinder geopolitical encirclement. This logic is not new. The ancient concept of Raja mandala, described in the Arthashastra, envisaged building alliances beyond the immediate neighbourhood—especially when neighbours are hostile. 

Indian history has repeatedly demonstrated the effectiveness of this approach: the Delhi Sultanate used alliances with the Deccan to counteract pressure from the north; and in 1970s, India turned to Soviet Union to balance the US and China influence. Today, Delhi is using this logic again. By intensifying its relations with Iran, Afghanistan, and Central Asia, it seeks to build strategic depth and expand its maneuver space beyond the area where Sino-Pakistani pressure is most felt. 

A key element of India’s strategy to escape the continental “squeeze” is Chabahar Port, India’s largest infrastructure investment outside its borders in years, and its significance extends far beyond logistics. The port integrates India with the International North-South Transport Corridor-- a multimodal transport network connecting it with Iran, Azerbaijan and Russia, with branches reaching the Caucasus, Central Asia and Europe. Chabahar offers a viable alternative to routes through Pakistan, where tensions with Afghanistan and India significantly hamper goods’ transit. 

The project, however, is not without risks. These include tensions related to sanctions on Iran, Beijing’s pressure on Tehran, and the uncertain situation in Afghanistan. Despite these challenges, Chabahar remains a structural investment—one of the few projects changing the geopolitical map of Indo-Eurasia and serving as a key tool for stabilizing transport routes and establishing new channels of influence in the region. 

A year after the US withdrew from Afghanistan, agreements granting India operational access to the Ayni and Farkhor air bases in Tajikistan expired, weakening its ability to project power in the region. In response, New Delhi intensified its functional diplomacy, maintaining working relationships, strengthening economic influence, and ensuring basic security conditions for investment. 

The priority goal was to block the possibility of using Afghanistan both as a strategic depth for Pakistan and as a base of operations for terrorist groups operating against India. Since 2022, technical dialogue with Taliban has resulted in declarations of non-support for such groups. In parallel, Delhi has consistently developed software power. Projects in healthcare, education, pharmaceuticals, and food security, as well as visa facilitation for Afghans, strengthen India’s image and increase local dependence on its presence. 

The turning point was the first recent official visits of Taliban representatives to Delhi: Foreign Minister Amir Khan Muttaqi and Commerce Minister Nooruddin Azizi. Reactivation of Indian embassy in Kabul, resumption of air links, and cooperation in healthcare, hydropower, and sports were agreed. Azizi presented a package of incentives for Indian investors: five-year tax breaks, minimal (1%) customs duties, and priority access to land leases in sectors such as mining, pharmaceuticals, and hydropower. 

Afghanistan remains an area of strategic importance yet burdened by uncertainty. Despite lack of formal recognition, India-Taliban relations are deepening, serving as tool for risk management and regaining strategic space. Reactivation of a limited diplomatic presence in Kabul allows for continuation of development projects but doesn’t eliminate risks related to competition from China or potential destabilising actions by Pakistan. 

The escalating conflict between Taliban government and Islamabad is indirectly fostering rapprochement between Afghanistan and India, increasing Delhi’s manoeuvrability in the region. Pakistan perceives India’s presence in Afghanistan as a threat, accusing it of supporting terrorist organisations such as the Tehrik-i-Taliban Pakistan (TTP) and Baloch separatists, further complicating regional security dynamics. 

Afghanistan is becoming a battleground for access to Central Asia, where transportation infrastructure serves to build political influence. The most dynamically developing corridor is the Uzbekistan–Afghanistan–Pakistan, supported by China and linked to the CPEC. It shortens transit to approximately five days and strengthens Pakistan’s role as a logistics hub, deepening Afghanistan’s dependence on Beijing and Islamabad. 

Central Asia offers India some room to maneuver, particularly in sectors that don’t conflict with China’s interests, although Beijing’s economic and infrastructural presence in the region remains a significant factor limiting its freedom of action. The region’s states pursue multi-vector policies, seeking partners who do not impose hegemonic conditions. India is perceived here as stable, predictable, and offering cooperation based on education, skills transfer, and technology. 

It encompasses several key areas -- projects in ICT; educational initiatives related to IITs  being implemented; bilateral trade exceeds $2 billion, with investments concentrated in energy sector, among others. Although India does not fully constitute a geopolitical counterweight to China, it can play a balancing role in selected sectors, increasing the flexibility of the region’s multi-vector policies. 

A discreet competition for resources, energy access, and political influence is underway in Central Asia. Russia is trying to maintain its traditional sphere of influence, China is expanding the BRI, and Turkey is developing pan-Turkish cooperation. Beijing is responding to India’s actions by strengthening cooperation with Iran—primarily in energy sector—and expanding the China-Pakistan CPEC corridor. It aims to maintain its advantage in the southern section of Eurasian trade routes and limit India’s room for manoeuvre. 

Islamabad perceives India’s presence in Iran and Afghanistan as a threat to its strategic depth. The weakening importance of transit routes through Afghanistan, reduces Pakistan’s role as a link between South and Central Asia and Middle East. In response, Pakistan has engaged in diplomatic and intelligence activities aimed at restoring its influence in Afghanistan and controlling the Taliban’s relations with Delhi. 

Islamabad is balancing Chinese interests with its own strategic autonomy in the region, leveraging its influence channels to maintain independence in key political and economic decisions. China and Pakistan’s actions must also be understood in the context of broader regional rivalry, including the growing presence of India and the US in South and Central Asia. 

India’s Western shift is the result of the collaboration of several key power centers, each interpreting it through the prism of its own priorities. The Ministry of Foreign Affairs views this strategy as a tool for political diversification, allowing India to expand its influence beyond its immediate neighborhood and reduce its dependence on Sino-Pakistani pressure. 

The NSC sees the pivot as an instrument to manage the risks associated with terrorism and the stability of Afghanistan, which remains a crucial element of regional security. The Indian Army sees the Western vector as an opportunity to relieve the Himalayan front by shifting its strategic attention to new operational areas. In turn, the ruling BJP sees this orientation as evidence of India’s growing position in the global system, its ability to shape its own geopolitical space and build a soft power. power on the international stage. 

The shift, a process that has been ongoing since the middle of last decade, is result of an integrated approach by various centers of power, skillfully combining the priorities of security, the economy, and India’s global image.---INFA 

(Copyright, India News & Feature Alliance)

REWIND

New Delhi, 25 December 2025

LEADERS FAIL PARLIAMENT

By Inder Jit

(Released on 20 December 1983) 

Parliament and its proceedings have seldom caused greater anguish all round than during the current session, now drawing to a close, not only acknowledged experts but ordinary folk are beginning to ask: Is Parliament serving any purpose? Both the Lok Sabha and the Rajya Sabha have outwardly continued to hit the headlines. Nevertheless, popular interest in their proceedings has plummeted and is today as low as in the lifeless review of Parliament put out daily by the Doordarshan late in the night under the title: Parliament News. What is worse, Parliament seems to make less and less impact on the executive. Nothing illustrates this more poignantly than the explosive Punjab situation. Unlike at any time in its history, both Houses demanded that law and order be enforced firmly in the state. The Speaker of the Lok Sabha, Mr Balram Jakhar, too, expressed himself boldly as never before. But nothing came out of the entire exercise. The Union Home Minister, Mr P.C. Sethi, merely sat back, presenting a pathetic picture of indecision and helplessness.

That was at zero hour on Monday, December 5 --- three days after Mr Jakhar felt compelled to convey to the Home Minister the strong feeling of the House on Sant Bhindranwale's provocative statements and to firmly direct Mr Sethi to report on what action was taken. Yet Mr Sethi merely did two things. First, he appealed to the Akali Chief, Sant Harchand Singh Longowal, and the SGPC President, Mr Gurcharan Singh Tohra, to ask Sant Bhindranwale to leave Nanak Niwas and surrender to the authorities. Second, he advised Sant Bhindranwale to surrender where cases had been registered against him by the police. The issue came up in the Lok Sabha again later that day when the House discussed reports about training camps for Punjab terrorists. Members from both sides of the House renewed their demand for stern action. However, Mr Sethi said it would not be proper to discuss in the House the details of what the Government intended to do and added: "These are matters which have to be dealt with at an appropriate level by a competent authority,"

Appropriately, the Rajya Sabha as the Council of States took up the issue the following day --Tuesday, December 6. Leading members from both sides of the House urged the Government to give up forthwith its "policy of drift" and take strong and pragmatic measures to stem the tide of extremist violence in Punjab. Mr Harkishan Singh Surjeet, CPM, seemed to air the strong feelings of the House as he said that Mr Sethi's statement (in the Lok Sabha) was most disappointing and did not reflect the gravity of the situation nor did it give any idea about how the Government proposed to tackle it. But Mr Sethi again declined to say anything on the members' demand for immediate action against Sant Bhindranwale. He repeated what he had stated in the Lok Sabha. It would not be proper for him to discuss the details at present. "Kindly leave the matter to competent authorities." However, he did give one bit of information. Eight first information reports had been filed against the militant Sikh leader since February this year.

Matters did not mercifully end with one angry outburst. The issue came up again in the Lok Sabha a week later – on Monday, December 12 – when the irrepressible Mr Maniram Bagri, Lok Dal, disclosed that the Speaker was now on Sant Bhindranwale's "hit list" because of his stern directive to the Government for action against the latter’s inflammatory statements. Mr Jakhar told the House that whatever he had said was “in the line of duty” and he was not bothered if his name was on any hit list. He then turned to the Government and observed that anybody who talked in terms of killing others should be caught and punished. The Rajya Sabha, too, expressed concern over the reported threat to the Speaker. The Deputy Chairman, Mr. Sham Lal Yadav, said the whole institution of Parliament was being threatened. He asked the Government to take “strong measures” to ensure the safety of the Speaker. The Leader of the House, Mr. Pranab Mukherjee, assured the House that “all steps” would be taken. When members pointedly suggested “arrest” of the Sant, Mr. Mukherjee merely said the Government would not hesitate to take the necessary measures.

Not surprisingly, Mrs Gandhi is widely blamed for the sad state of affairs, informally admitted to be "humiliating" by Congress-I MPs too. She is both Prime Minister and the Leader of the House and as such is expected to uphold the dignity of Parliament and to preserve its priceless heritage. (At least one MP in the Lok Sabha movingly recalled the time when Sardar Patel, India's Iron Man, was the Home Minister.) Unfortunately, Mrs Gandhi continues to treat Parliament lightly and has generally been conspicuous by her absence from the two chambers on major or controversial issues. One looked in vain for her when the Lok Sabha, for instance, discussed the Punjab issue on Monday, December 5 following the Home Minister's prepared statement (Some members, visibly provoked by Mr Sethi's eloquent silence on specific questions, pointedly demanded a statement from the Prime Minister.) There was no sign of Mrs Gandhi either when the two Houses held a mid-term appraisal of the Sixth Plan or discussed the price situation which does not seem to have created any problem for most Congress-I MPs.

The Opposition is, however, no less to blame. Their top leaders are equally conspicuous by their absence from the Lok Sabha on crucial occasions. Most of them generally come to the House only on special occasions to make a speech. Perhaps, they have good reason to become cynical over the years. The present Government invariably functions as a brute majority and generally refuses to play the parliamentary game according to rules. But in doing so they show ignorance of parliamentary practice and tactics. Nothing is achieved by raising an issue just once and in delivering a broadside, howsoever powerful. Issues have to be pursued, especially where public passions are roused or basic principles and values are involved. The late H.N. Kamath and Thakur Das Bhargava achieved a lot more through patience and perseverance than many latter day orators. In the case of Punjab, an intervention in the discussion on December 2 or 5 by Mr Charan Singh, as a former Prime Minister, or by Mr Jagjivan Ram, Mr Chandra Shekhar or Mr Vajpayee should have made all the difference. They had a clear notice of three days.

Consequently, Parliament has lost some of its effectiveness and the executive has got away with murder time and again. What is more, truth has often become one of the major casualties. All kinds of statistics and figures were, for instance, trotted out during the discussion on the Sixth Plan and soaring prices. But at the end confusion became worse confounded and few were any the wiser. Time was when facts were sacred and comment free -- as in the fourth estate in the years gone by. Today, facts have tended to become free and are often fabricated, bringing to mind the Churchillian quip: There are three kinds of lies today. Lies, damn lies and statistics." The various price indices -- wholesale, retail, consumer and what have you -- bear little relation to facts in the market. Every Government makes its own statistical claims in regard to various matters, such as the number of people still below the poverty line. Ironically, no Opposition leader has thought it fit to demand an institution which can give the country objective, credible facts.

Our country has always laid store by truth. The Constitution makers, therefore, advisedly opted for satyamewa jayate as free India's motto. Truth is basic to Parliament and nothing is considered unpardonable at Westminster, the mother of Parliaments', than a lie told in its sanctum sanctorum. Profumo had to go because he told a lie on the floor of the Commons and not because he went to bed with Christine Keeler. Since parliamentary democracy provides for rule by discussion and consensus, great emphasis is placed on facts -- authentic and credible -- and every effort made to ensure an informed debate. In Britain, the Government makes it a point to present "Command Papers" considered to be of interest to Parliament whose presentation is not required by the statute. Often it issues white Papers for purposes of debate or consultation prior to final government decision. Yet, a legitimate demand in the Rajya Sabha for a White Paper on the Punjab situation was rejected by Mr Sethi on the facetious plea that "all the facts are known."

Many unprintable stories are today heard in Parliament's Central Hall about the Union Government's inaction and impotence vis-a-vis Punjab. All this may be fun and one that has tended to add a much-needed sparkle to the dull and largely lack-lustre atmosphere of the historic hall. (Where oh where are the well-informed MPs?) But it raises certain basic questions of vital interest to Parliament and its future. On the very day the Rajya Sabha was agitatedly clamouring for Government's mind on Punjab, namely on Tuesday, December 6, the Prime Minister reportedly met some of her party MPs informally on Punjab and gave the impression that she wanted the law and order problem in the state dealt with first. She should instead have come before one or the other House and taken Parliament into confidence -- something none of her colleagues, alas, are in a position to do. Either we stand for parliamentary democracy or we do not. Mrs Gandhi is welcome to have her reservations. But she has a duty to Parliament --and to an anxious nation. ---INFA.

(Copyright, India News and Feature Alliance)

Round The World

New Delhi, 26 December 2025

India-New Zealand FTA

NEW CHAPTER IN BILATERAL TIES

By Dr. D.K. Giri

(Prof of Practice, NIIS Group of Institutions) 

India and New Zealand have just concluded negotiations on a comprehensive Free Trade Agreement (FTA) marking a significant milestone in their economic partnership. The negotiations, finalised on 22 December aim at doubling the bilateral trade over the next five years, synergising the respective strengths of both countries. Union Minister for Commerce, Piyush Goel with his New Zealand counterpart Todd McClay with their respective teams, closed the negotiations in New Delhi. 

To mention the key highlights of the Agreement, India will gain zero-duty access for all goods exports to New Zealand, while New Zealand will receive duty concessions on 70 per cent of India’s tariff lines, covering 95 per cent of its export to India. 

On investment, New Zealand has committed to facilitating investments amounting to 20b USD in India over the next 15 years. Such investments will focus on manufacturing, infrastructure, services and innovation. On service sector, in which India has competitive advantage owing to its large base of manpower, New Delhi has secured commitments across 118 services including IT, professional services, education, financial services, tourism and construction. On people’s mobility, again, one of the India’s top priorities, the Agreement includes a dedicated quota of 5000 temporary employment visas for Indian professionals and 1000 on work and holiday visas. 

If we look at sectoral opportunities, four major sectors may receive a boost out of this Agreement. They are textiles, apparel, pharmaceuticals, agriculture, IT and services. Zero-duty access in textile and apparel improves India’s price competitiveness in 1.9b USD textiles import market of New Zealand. 

Pharmaceuticals will have increased access to New Zealand’s 1.4b USD pharmaceutical import market. Cooperation in agricultural productivity will benefit India with New Zealand establishing Centres of Excellence for apples, Kiwi fruit, and honey. India’s IT sector is poised to benefit from enhanced access to New Zealand’s growing service market. 

The strategic significance of the FTA between India and New Zealand is part of New Delhi’s broader strategy to diversify its exports and strengthen ties with countries in the Indo-Pacific region. The Agreement is most likely to enhance economic growth, create jobs and increase people-to-people connections. Furthermore, it aligns with India’s Act East Policy and New Zealand’s Indo-Pacific Strategy. 

While it sounds all good, the Agreement might come across some challenges during its implementation. These include the usual Non-Tariff Barriers (NTBs) on account of divergent regulatory standards, exclusion of India’s dairy sector, implementation capacity – constraints of MSMEs and service providers and potential competition for Indian industries. However, both countries are working on addressing these potential challenges through continued dialogue and cooperation. 

New Delhi safeguarded the interests of its farmers and dairy producers, which is considered politically sensitive. That is why India made no concessions on import of dairy products, onions, sugar, spices, edible oils and rubber. Piyush Goel said, “The government has been sensitive in protecting interests of farmers and dairy producers”. He added, “Rice, wheat, soya and various other agricultural products have not been opened up with any access”. 

On the other hand, New Zealand’s Foreign Minister Winston Peters criticised the deal, saying it gives too much away, especially on immigration, and does not benefit New Zealand’s dairy farmers. He said in post X, on Monday, “The FTA is neither free nor fair” and warned that it is a ‘bad deal for New Zealand as it gets too little from India’. 

It is understandable as Peters belongs to a party called New Zealand First, with a nationalist political ideology and a partner in the ruling coalition. Peters also cautioned their coalition partner not to “rush into concluding a low-quality deal with India as getting parliamentary majority for that deal was uncertain”. However, according to Peters himself, the Prime Minister Luxon did not heed his pleas and chose to conclude the deal pending the formal signing of the Agreement. 

Hailing the FTA, to be signed in the first of 2026, Prime Minister Narendra Modi said, “Concluded in just nine months, the historic milestone reflects a strong political will and shared ambition to deepen economic ties between our two countries”.  Perhaps Modi had in the back of his mind over 16-year negotiations for an FTA with the European Union which are still not over. PM Modi spoke to his New Zealand counterpart Christopher Luxon over the phone when the two leaders jointly announced conclusion of the “historic, ambitious, and mutually beneficial India-New Zealand Free Trade Agreement. 

According to an official statement, from the External Affairs Ministry, the FTA would significantly deepen bilateral economic engagement, enhance market access, promote investment flows, strengthen strategic cooperation between the two countries, and also open up new opportunities for innovators, entrepreneurs, farmers, MSMEs, students and youths of both countries across various sectors. 

Specifically, on the economic impact, the FTA is projected to double the bilateral trade within five years that is largely due to India’s exports to New Zealand availing zero-duty access on almost all tariff lines. At the same time, New Zealand’s exports to India are expected to increase by 1.1b USD to 1.3b USD annually over the next two decades. So, the Agreement is likely to deliver overall economic benefits by creating new opportunities for businesses of both countries. Indian exporters can explore new opportunities in sectors like textiles, pharmaceuticals and agriculture while New Zealand’s companies can benefit from India’s growing market for services, manufacturing and infrastructure. MSMEs and Startups in both countries with comparative advantage to India in numbers of such entities, can leverage the Agreement to expand their footprints. 

The Agreement will help Indian exporters, reeling under the impact of unexpected 50 per cent tariffs imposed by the Trump Administration on Indian goods. Since then, Indian exporters have been diversifying their shipments to the India-Pacific region. India has already signed a trade pact with Australia. Commerce Minister Goel assured that the Agreement with New Zealand will provide a fillip to labour-intensive sectors such as textiles, apparel, leather, rubber, footwear and home décor. It will also encourage export of automobiles, auto components, machinery, electronic goods and electrical and pharmaceutical products. 

The employment visas although temporary, will cover AYUSH practitioners, Yoga instructors, Indian chefs and music teachers, as well as from high-demand sectors like IT, engineering, healthcare, education,  and construction, strengthening professional and semi-professional mobility and services personnel. 

The India-New Zealand FTA is expected to be signed in coming months, paving a new way for its implementation. Both countries are working on addressing the possible challenges while maximising the benefits accruing from this Agreement. At any rate, with the FTA, India and New Zealand are set to take their bilateral trade to the next level. This Agreement should also deliver concomitant political and strategic benefits. Credit for having another FTA with a country in the Indo-Pacific region must be given to the current Indian government. ---INFA 

(Copyright, India News & Feature Alliance)