The India New Zealand Business Council has poured cold water on the National Party’s idea of restarting free trade talks with India, but has praised the renewed focus of political parties on the world’s most populous state.
Amid nervousness about China’s increasing assertiveness, and with India developing much closer diplomatic ties with Australia, the United Kingdom, United States, Japan and the European Union, both Labour and National have placed renewed focus on India-NZ relations.
The government has sent three ministers to India in less than a year, including Foreign Minister Nanaia Mahuta – though National has criticised the government for not sending them earlier.
National has highlighted the more frequent trips made by the Australian government and that country’s greater success in securing a trade agreement.
India’s prime minister, Narendra Modi, paused all free trade agreement negotiations in 2014 and India walked out of Regional Comprehensive Economic Partnership negotiations in 2019.
But India appeared to have a change of heart in 2021 when it started exploring trade talks with Australia, Canada, the Gulf Co-operation Council and others.
India NZ Business Council (INZBC) chair Earl Rattray said NZ urgently needs to focus on building relationships in India, if only to make sure NZ companies do not have a competitive disadvantage with companies from other countries.
But “if you start trying to start a relationship on the basis that it has got to be free trade or nothing, then your relationship won’t go far at this point in time”, Rattray said.
National said it would make a free trade agreement with India a “strategic priority”, but Rattray said it might be better not to even say the term out loud.
“Some of these things are best approached obliquely. Sometimes the less you use the phrase, the more you increase your chances of achieving it.”
The INZBC has sent a letter to the government, which includes a report – “India & New Zealand: A Relationship Ready for Its Next Phase” – chronicling a list of NZ foreign policy failings in India, along with a set of suggestions and targets for improving the relationship.
Trade is a big part of the report, but the INZBC’s argument is that NZ might be better off striking smaller deals or establishing a greater level of trust first.
NZ prime ministers have only visited India four times in four decades, and too few diplomatic resources have been dedicated to servicing a region with 20% of the world’s population. NZ’s focus on trade has come at the expense of other relationships: immigration issues have damaged diplomatic relations, trade with India has declined, there are no direct flights and there are too few business and cultural links between the two countries.
One thing that could improve NZ’s trade outreach in India is a combined government and private-sector approach, because a private enterprise carrying the backing of a particular government carries “great significance” in India, according to the INZBC report.
The report also points to direct flights as a good way of establishing better cultural and business links between the two countries, although it notes this will ultimately be a commercial decision for airlines.
Cultural links are key in order to establish a stronger friendship between India and NZ, which could include expanding the reach of initiatives like the Asia New Zealand Foundation or creating more exposure for te ao Māori in India.
The INZBC says NZ should aim to create a long-term strategy for India-NZ relations – similar to the 500-page Peter Varghese-authored report Australia produced in 2018 – by the end of 2024, alongside an ambitious target such as doubling NZ’s two-way trade with India in five years.
The INZBC report says issues around visa processing times and unfair treatment have also created a reputation problem for NZ in India.
The issue was India felt its citizens were not getting equal treatment to what they might get in Australia, Canada or the UK.
INZBC treasurer Jay Changlani said the movement of people is an enabler of trade, while freer movement and the growing Indian middle class also represent a potential source of tourists for NZ.
Establishing a direct flight between an Indian city and NZ is recommended in the INZBC’s report, a move it argues could also help encourage more tourism from India.
The report notes issues around student visas that make it difficult for specialist education providers in areas like aviation to provide services to markets like India’s fast-growing aviation sector.
Changlani contrasted the current situation to what things were like when he moved to NZ 18 years ago.
“My first preference was NZ, No 1 preference, ahead of everybody else. I think, in the current situation, it’ll be in the top 10 or missing the top 10 at this stage.
“I think there’s a lot of work to be done, and with Australia and everybody else putting in the effort there’s a risk that we will lose quite a bit of the NZ brand that we had.”
Rattray said the difference between NZ and other countries on visa settings comes down to a number of small things that have all added up: visa processing times, a lack of recognition for qualifications, and complications around bringing partners into NZ.
“We do have people employed in NZ who are leaving their jobs in NZ and going to Canada because their wives can join them in Canada straight away. Need I say any more?
“The standard for us is, does NZ show the same respect to Indian visa and immigration applicants as India’s other trading partners do? That’s the benchmark.”
Though not specifically mentioned in the report, Indians have found it difficult to bring their partners into the country due to Immigration NZ rules that effectively require partners to have lived together for a long period of time.
Newly married Indian couples often find it hard to satisfy this requirement due to cultural norms around living together before marriage.
“NZ’s settings need to be, at least, competitive,” Rattray said. “We cannot afford not to attract the brightest and the best from a country that’s got the biggest pool of highly educated, talented, English-fluent, internationally mobile youth.”
NZ traditionally focuses its diplomatic and trade resources on countries it exports to or where it has a good chance of securing a “gold standard” free trade agreement.
This has led NZ to allocate fewer diplomatic resources to India, which has only two free trade agreements among the top 20 countries it trades with.
The INZBC report says NZ needs to have regular ministerial visits and an annual combined government and business delegation to India.
Waitakere Indian Association president Sunil Kaushal said NZ should also aim to widen the circle of people included in those delegations.
“India is the capital of startups – take some startup [entrepreneurs].”
NZ International Business Forum executive director Stephen Jacobi welcomed the report and said the time is right for a renewed focus on India.
“While we will always be interested in a future free trade agreement, we need to rethink the way we approach this important partner,” he said.
“That approach has to be based on understanding how NZ can play a role in India’s continuing development story.”
Rattray said NZ’s diplomats are spread too thinly on the ground in India and are meant to cover other countries in south Asia, too, including Bangladesh (169 million people) and Nepal (30 milion people).
The INZBC report notes NZ has fewer diplomatic resources in India than either Australia or Singapore, but has allocated more development resources to the Association of Southeast Asian Nations region.
NZ’s Tertiary Education Commission-funded Centres of Asia-Pacific Excellence include north Asia, southeast Asia and Latin America – but not south Asia.
“Our resources on the ground are stretched too far and spread too wide. One high commission, one consulate and one trade commissioner covering 17.7% of the world’s population,” Rattray said.
Compare that with Australia’s trade promotion agency Austrade, which has six offices in different parts of India.
“And look at where this is going to be in 30 years’ time. This is about thinking ahead of the game and investing for the future.”