India–New Zealand FTA Meets the Kiwi EV Surge Head-On

India and New Zealand signed a Free Trade Agreement on Monday that eliminates tariffs on all Indian goods from the day it takes effect, including duties of up to 10 percent that had been undercutting Indian car and parts exporters in the New Zealand market for years.

The timing is good. Indian vehicle shipments to New Zealand have been climbing steadily. Passenger cars made up about USD 10 million of the roughly USD 488 million India exported to New Zealand in FY2022. By FY2026 (through February), total exports had grown to USD 524 million, and vehicles had jumped to 5 percent of the basket, around USD 26 million, according to a Rubix Data Sciences trade analysis. With the tariff gone, Indian manufacturers will now compete on the same footing as exporters from New Zealand's other FTA partners.

The market they're entering is shifting fast, as fully electric vehicles claimed 16.5 percent of new registrations in New Zealand in March 2026, with 2,370 units sold that month alone. For the year so far, EVs account for 10.6 percent of new light vehicle sales, nearly double the 5.7 percent they averaged across all of 2025. Plug-in hybrids and electrified vehicles have held roughly 45 percent of monthly new car sales since late 2024. The fleet itself still runs mostly on combustion engines, with EVs and plug-in hybrids together at just over 3 percent of the country's 4.4 million light vehicles, which means the replacement opportunity is large and still early.

Mahindra Group CEO Anish Shah called the deal one "built on shared trust and concluded with remarkable speed," saying it opens doors across farm equipment, mobility, technology, and hospitality.

Indian manufacturers also gain on the raw material side. New Zealand's ferrous scrap exports to India have risen from 7 percent of the import basket in FY2022 to 13 percent in FY2026, and wood logs have risen from 6 to 13 percent over the same period. The agreement explicitly guarantees duty-free access to wooden logs, coking coal, and metal scrap, inputs that feed directly into India's domestic auto supply chain.

The industrial states best placed to benefit are Maharashtra, with its dense auto component base, and Tamil Nadu, a major hub for automotive exports as well as textiles and leather. Both were named in the government's press release as key beneficiaries.

The deal is India's seventh FTA in three and a half years and takes effect once both countries complete their domestic ratification processes.