22 May 2023

The India dilemma

From The Detail, 5:00 am on 22 May 2023

New Zealand is lagging well behind Australia when it comes to forging a trade deal with what is now the world's most populous country. As Prime Minister Chris Hipkins meets with his Indian counterpart Narendra Modi in Papua New Guinea, The Detail considers whether New Zealand's underestimated what it takes to do business with India.

People throng a street near the Jama Masjid in the old quarters of New Delhi on April 19, 2023. - India is set to overtake China as the world's most populous country by the end of June, UN estimates showed on April 19, 2023, posing huge challenges to a nation with creaking infrastructure and insufficient jobs for millions of young people. (Photo by Arun SANKAR / AFP)

 A busy street near the Jama Masjid in the old quarters of New Delhi Photo: AFP

Free trade deals have long been the backbone to New Zealand's relationship-building with the wider world.

India has recently overtaken China to become the world's most populous country and the International Monetary Fund predicts it'll be the fastest-growing economy this year.

So it seems a no-brainer, for a trading country like New Zealand, to court closer ties with this emerging powerhouse.

But it's not that simple. 

Asia New Zealand Foundation director of research and engagement – and former deputy High Commissioner to India – Suz Jessep says a 'trade first' approach, similar to that taken by New Zealand in other places, won't work in India.

Building a relationship based on trust and commitment, rather than what New Zealand can sell, is key

The legacy of colonisation also weighs heavily on India's approach to trade. Jessep says while it's opening parts of its market where it sees a strategic advantage, it's protecting other areas where it believes its core interests might be vulnerable.

This includes the agriculture sector.

And this is where things get tricky for New Zealand.

On the Indian side, there would be concerns about the precedent that would be set if New Zealand did get a free trade deal with dairy and agriculture included – others would want that too.

But for New Zealand, if agriculture is left out of a potential deal, it becomes a lot less valuable.

Portrait of Suz Jessep. She is looking directly at the camera.

Suz Jessep, Asia New Zealand Foundation director research and engagement Photo: Supplied

"I think it's been put on the backburner because we don't really yet know what kind of deal we can get across the line with the trade profile we've got," Jessep says.

"India is definitely not holding its breath for New Zealand, it's being hotly courted by many other countries, it's everyone's next big opportunity."

Australia has done an early stage free trade deal with India - the first western country to do so – but Jessep says that hasn't been the product of trade negotiations.

Rather, Australia has spent the last 10 or so years prioritising the relationship over successive governments, including at a leader level. Jessep says Australia views India as a critical partner on things like defence and security; not just a trade opportunity.

It also re-focused its trade pitch to things like services and investment.

"Australia and New Zealand have a legacy of being a bit hot and cold with India, which kind of gives the impression that we're treating it like it's expendable, because we haven't had a valuable FTA to anchor it or that's been at stake," Jessep says. 

"I think we've kind of looked at the relationship as a bit hard and low return compared to others in Asia."

To advance the relationship, Jessep says New Zealand will really need to do its homework.

One Kiwi company that's done just that is Quality New Zealand.

It's been operating for just over a decade, leveraging relationships forged through cricket, to get New Zealand products into the Indian market.

Executive director Geoff Allott says they identified sheepmeat as the "low hanging fruit" and it's been able to get New Zealand lamb products into the food service sector and five star hotels.

The company controls the supply chain from start to finish, with a subsidiary company operating in India. 

Allott says that's a much more efficient way of doing business in a country where they're faced with a 33 percent tariff.

He tells The Detail about how Quality New Zealand's high profile cricket ambassadors and shareholders have helped cement their ties in a notoriously difficult market to navigate.

Hear more about how cricket has opened doors for Quality New Zealand in the full podcast episode.

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