It is predicted that by 2025 India will be the third largest economy in the world and New Zealand is well on the way to tapping into that potential.
On the back of a further round of trade talks between New Zealand and India that were concluded last week, soaring Indian business confidence levels continue to underpin the importance of the world’s second biggest country to New Zealand.
The 10th round of negotiations to create a free trade agreement (FTA) between the two countries concluded last week, attended by five negotiators from the Ministry of Foreign Affairs and Trade, supported by the High Commission in India.
Greg Thompson, National Director, Tax at Grant Thornton New Zealand, said that a recent International Business Review (IBR) survey of 35 countries showed India had the highest business confidence at 98% with New Zealand second equal with Ireland at 82%.
“India’s business confidence levels have been high for some time and this buoyancy can only flow through to the rest of the economy and a continuation of the growth in trade between India and New Zealand,” he said.
According to Ministry of Foreign Affairs and Trade, India is New Zealand's 15th-largest bilateral trading partner. For the year ended June 2013, overall goods trade between the two countries was over NZ$ 1.1 billion. Of that total, $725.912 million was New Zealand exports going to India, making India our 12th-largest export destination.
“Even this figure understates the importance of the Indian market, with exports having increased rapidly from just NZ$366 million five years earlier, reflecting India's emerging economic power.
“India is also a key services market and has quickly become New Zealand's second-largest source of international students. There were 11,652 international fee-paying students from India in New Zealand in 2013, nearly double the number in 2008.
“Over 29,000 Indians visited New Zealand in 2012, preferring to come during their summer (April to June) making them a valuable source of visitors for New Zealand's autumn shoulder season.”
In recognition of these trade trends, as well as its political influence on the world stage, India is a priority relationship for New Zealand and is our most developed relationship in South Asia.
The New Zealand Government is implementing an interagency strategy that is working towards India being a core trade, economic and political partner for New Zealand by this year.
The NZ Inc India Strategy, launched by Prime Minister John Key in October 2011, has several broad economic goals that a Free Trade Agreement (FTA) will help achieve. These are:
- grow merchandise exports to at least NZ$2 billion per year by the end of this year;
- grow services trade with India by an average of 20 percent a year;
- improve the bilateral investment framework and facilitate growth in the investment relationship
- attract and retain skilled migrants from India who are able to make an effective contribution to New Zealand’s economic base.
“While the Free Trade Talks may take some time to reach a successful conclusion, growth in trade between the two countries will continue to grow apace with exponential benefits for New Zealand,” he said.