Since the United States complicated trade negotiations with India due to tariffs, India has been adapting its strategy. In response, India has been actively forging Free Trade Agreements (FTAs) with multiple countries to enhance the demand for Indian products in markets outside the U.S. and buffer the impact of American tariffs.
The government's ambitious aim with these FTAs is to elevate Indian exports to new heights. Recently, India has signed FTAs with the UK, Oman, and now New Zealand. Through these agreements, imported goods will become more affordable, while export costs will diminish, creating balanced trade opportunities for all involved.
The FTA with New Zealand is generating a buzz about Kiwi fruits, as their import to India might surge due to expected price reductions. Currently, a single Kiwi in India costs around 50 rupees or more. But how will these costs be affected? Understanding the import dynamics and duties on Kiwis in India is essential before diving into this question.
How much Kiwi do we import from New Zealand?
New Zealand is a significant Kiwi producer, yet only about 5% of India's Kiwi imports come from there. In 2023, India imported around 55,000 tons of Kiwis overall, with approximately 2,700 tons sourced from New Zealand. The new FTA is expected to facilitate larger imports from New Zealand due to the removal of import taxes, making Kiwis more affordable than those from other regions.
Source: aajtak
What is the current tax on New Zealand Kiwis?
India imports various goods from New Zealand, including fruits (Kiwis), wool, wood, dried fruits, and other agricultural products. With the new FTA, most of these will see taxes dropped to 0. Kiwis currently have a 33% import tax, but this will fall to 0% under the deal.
How much cheaper will New Zealand Kiwis become?
Initially, up to 6,250 tons of Kiwis will be duty-free under the FTA. This quota is planned to increase to 15,000 tons over the coming years. Even beyond the quota, taxes will be significantly reduced, leading wholesale Kiwi prices to drop, subsequently decreasing retail prices as well.
Pricing predictions can be challenging, as reductions depend on several factors, including the volume of Kiwi imports from New Zealand, logistics, and freight costs. Local market prices and import demand will also influence final prices. Economists suggest that tax reductions could result in a 20 to 30 percent price drop for New Zealand Kiwis.
