Monday, April 22, 2024

Long game ahead on India trade

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No quick and easy deal, experts warn as weighty business delegation heads to New Delhi.
Trade Minister Damien O’Connor chats with his Indian counterpart Piyush Goya. Photo: twitter.com/PiyushGoyal
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A New Zealand delegation visiting India is not arriving with expectations of landing a free trade agreement with the populous nation any time soon.

A delegation of 50 business leaders representing all aspects of NZ industry are to attend a four-day summit in New Delhi from August 28. 

Delegate and long-time trade negotiator Stephen Jacobi said expectations should not be pinned on landing an FTA, but rather on building understanding and stronger relationships with India’s business and political leaders.

“We have been down the FTA track before with India, over the five years between 2010 and 2015. There are things on both sides that just do not make a deal feasible at this stage, including dairy and immigration settings,” he said.

As one of the world’s fastest developing emerging economies, India represents an attractive trade prize for any developed nation’s export portfolio. 

Its current annual economic growth rate of 6% to March this year needs to continue at a rate of 7-8% per annum to build a strong manufacturing base and facilitate a move away from its highly agrarian focus.  

At present 45% of India’s workforce is engaged in the rural sector, which contributes 25% of India’s GDP.

A recent India-NZ Business Council report on relations between the two countries has highlighted how NZ needs to take swift action to shore up its relationship with India or risk missing out on future opportunities as it emerges as the world’s third largest economy.

Despite being the world’s most populous nation, as of last year, India has slid to be NZ’s 16th largest trading partner. 

Michael Fox, chair of the India-NZ Business Council, said the business community has been advocating strongly for enhanced government investment in the relationship, given the opportunities it would help create.

“There are some great examples of New Zealand businesses succeeding in India and Indian businesses here, whether it’s Rakon, Valocity, Zespri or any other number, but there’s room and ambition to do lots more, especially if we’re willing to think creatively and to invest appropriately.

“What’s been really encouraging is the level of interest from businesses in the delegation, seeing or in many cases already pursuing those opportunities, and we hope this visit allow us to build on that,” he said.

Jacobi said there are things to be learnt from Australia’s approach to building a relationship with India. It has taken a long, measured focus on strengthening trust and understanding before trade issues were discussed. 

Earlier this year Australia earned an “early harvest” FTA with India that excludes dairy, beef and apples. Indian Prime Minister Narendra Modi received a rock star reception when he visited Sydney in May.

The India-NZ Business Council report highlights that NZ has only had four PMs visit India in 40 years, with diplomatic resources stretched thinly across the region. 

NZ has one high commission, one consulate and one trade commissioner covering 17.7% of the world’s population.

No funds are provided by NZ for aid projects anywhere in India.

Jacobi said a softly-softly approach focusing on investment and education would be a good pathway. The kiwifruit sector has been highlighted for its proposal to work closely with Indian growers for mutual benefit. 

The Bay of Plenty region holds one of the highest proportions of people of Indian descent in NZ, with deep investment in the kiwifruit sector.

Jacobi agreed that an offer for more Indian undergraduates to attend university to study areas like agriculture and horticulture could be a good way to build stronger relationships.

“Australia has been very focused and very strategic but there are differences there. There are things India wants from Australia that we just do not have.”

He said given NZ has already signed an FTA with the European Union that has significant compromises around dairy and beef, this country should be loath to sign up to another with similar constraints.

“The fact this delegation is led by the India-NZ Business Council and has five business organisations behind it means we are putting our money where our mouth is and all turning up,” he said.

Farmers Weekly journalist Richard Rennie will be travelling with the delegation. His visit has been funded by the Asia-New Zealand Foundation and Zespri.

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