Trade Minister Tim Groser’s office confirmed NZ government officials had resumed negotiations with their Indian counterparts in New Delhi last week.
It was the tenth formal round of negotiations for a free trade deal between the two countries since talks began in early 2010 and the first in nearly two years.
Talks were halted while a review of India’s trade negotiations was undertaken followed the victory of Narendra Modi’s BJP party in national elections in the middle of last year.
The portents for a deal with NZ were initially not good when a senior cabinet minister in September indicated India was keen to complete deals only with countries with the potential to enhance its own exports.
Commerce Secretary Rajeev Kher singled out demands by Australia and NZ for increased access to India’s dairy markets which he said he could not agree to.
Primary Industries Minister Nathan Guy was able to get agreement from his Indian counterpart last November that negotiations should be re-started early this year although trade-watchers here were sceptical given historic resistance to freeing up agricultural markets among the country’s influential bureaucracy.
Despite the stop-start nature of the talks the NZ dairy industry has long been confident that India would be forced to reconsider prohibitively high tariffs of up to 60% on milk powders along with other barriers to trade.
Dairy exports from NZ have failed to reach great heights in recent years and have fluctuated as Indian authorities relaxed or increased trade barriers depending on seasonal rains and domestic milk production.
Dairy Companies Association executive director Kimberly Crewther said local milk production was unlikely to be able to keep up with the demand created by forecast population growth of 20 million people a year between now and 2030 – giving it the largest population of any country in the world.
Such an explosion in population growth combined with increasing wealth was likely to be a game-changer for dairy imports.
“Translating that to what it means for dairy demand in India we expect it will grow more in the next ten months than NZ’s total production in the next ten years.”
Crewther said increased imports from NZ posed no threat to local farmers and could even boost the country’s export earnings by providing local processors with steady supply of materials for further manufacture and re-export.
She said Indian dairy processors had been hamstrung by export bans aimed at ensuring local consumers did not pay too much for milk.
“NZ has the opportunity to play a very complementary role but a very small role in meeting that large Indian dairy demand growth.”
Meat Industry Association chief executive Tim Ritchie said market access protocols agreed by the two governments in late 2012 had opened up India to NZ sheepmeat exporters for the first time.
But he said it remained a niche market for NZ exporters due to prohibitively high tariffs.
“Looking at the stats the volumes are not huge but they have been high value.
“It is something that is likely to evolve much more quickly if there is an free trade deal and the tariff is sorted.”
Ritchie said the protocol did not apply to beef – no surprise in a country dominated by cow-worshiping Hindus.
Although some states were more liberal when it came to the slaughter of cattle, and beef was a dietary staple for India’s 180m Muslims, it was unlikely beef would be included in the trade talks, Ritchie said.
“One would be very surprised if one was allowed to export beef to India.”
In the meantime, NZ is not the only country scrambling to get a piece of India's 1.2 billion consumer market.
Australian Trade Minister Andrew Robb earlier this year said completing its own negotiation with India was his country’s number one trade priority in 2015 after putting the finishing touches on its deal with China. Its sixth and most recent round was in December.
The European Union – expected to surpass NZ as the world’s largest dairy exporter by virtue of production quotas being lifted later this year – has also been in free trade talks with India since 2007.
