FTAs with New Zealand, Oman and the UK: Here’s how these trade pacts are a shot in the arm for the Indian economy

During the India-Oman Business Summit in Muscat on December 18, Prime Minister Narendra Modi famously said India has changed the “DNA” of its trade and economic policy.

PM Modi effectively highlighted his government’s recent structural changes and talked about India’s priority to engage more with the developed world for trade ties. Notably, this approach is much more visible this time, as India has successfully signed three free trade agreements (FTAs) in the last six months alone.

This year, FTAs have been signed with UK, Oman, and New Zealand. These agreements are crucial to India’s policy shift, which is aligned with its aim to become the third-largest economy soon.

India–New Zealand FTA

Most recently, India has signed a free trade agreement with New Zealand. According to Union Minister of Commerce & Industry Piyush Goyal, this agreement is unique in many ways. First, the negotiations for this agreement were completely led by women. Secondly, this is India’s third FTA with a Five Eyes nation. Thirdly, the negotiations came to a conclusion in just nine months, which is unusual in such dealings with countries.

Goyal said that while New Zealand has a smaller population and GDP, its potential for growth remains high. “Our current trade is a small proportion of their overall trade in goods and services, but the upside available for us is very large, both in goods and services,” he said during a press conference on December 22.

This deal is expected to strongly support India’s labour-intensive industries such as textiles, clothing, home decor, footwear, rubber and leather.

The minister also said that Indian students studying in New Zealand will now get a two-year work visa. Those completing a degree course will be eligible for a three-year work visa, while students studying STEM subjects will be able to get a four-year work visa.

“This deal is diverse and includes trade, education, R&D and innovation, the services sector, tourism and sports,” Goyal said.

India-Oman CEPA

India also signed a Comprehensive Economic Partnership Agreement (CEPA) with Oman on December 18 in Muscat. Under this agreement, India has got unprecedented market access for its goods, with zero duty on 98.08% of Oman’s tariff lines, covering 99.38% of India’s exports by value.

“The India-Oman CEPA strengthens the historically strong ties between India and Oman and signifies an ambitious and balanced economic framework that significantly enhances opportunities for Indian exporters and professionals,” Goyal said at a press conference.

Notably, Oman has agreed to remove tariffs on all major labour-intensive sectors. This includes gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, farm products, engineering goods, pharmaceuticals, medical devices and automobiles. Oman has agreed to immediately remove tariffs on nearly 98% of its tariff lines.

India’s services sector will also benefit. Oman has made strong commitments in many areas such as computer services, business and professional services, audio-visual services, research and development, education and health services.

The CEPA also makes it easier for Indian professionals to work in Oman. The quota for intra-company transfers has been increased from 20% to 50%. The allowed stay for contractual service workers has been extended from 90 days to two years, with the option to extend it for another two years.

India-UK FTA

After several years of negotiations, India formally signed a free trade agreement with the UK during PM Modi’s visit to the UK this year.

According to official estimates, the agreement could raise yearly trade between India and the UK by £25–34 billion by 2040. This is on top of the £42.6 billion in trade recorded in 2024.

This was the UK’s third-largest trade deal, after its agreements with Japan and Australia. More than just numbers, the deal focussed on building long-term economic strength between two countries that already have strong and growing links.

The agreement has given India a chance to improve its position in global trade, especially in sectors where it already performs well.

With zero-duty access to 99% of goods exported to the UK, Indian exporters in textiles, marine products, auto components, and gems and jewellery benefit the most. Clothing and textiles, which earlier faced tariffs of up to 12%, are now entering the UK without duties, making Indian products more competitive.

Indian tea, spices and ready-to-eat foods are also finding it easier to reach UK stores, helping Indian brands connect with more customers.

In the gems and jewellery sector, exports are expected to grow quickly. Shipments could reach $2.5 billion within two years, almost doubling total trade in this segment to about $7 billion.

The agreement is not limited to goods. It also supports India’s biggest global advantage: its skilled workforce. It expands opportunities in IT, finance, consulting and education, where Indian companies already have a strong presence. Simpler mobility rules and clearer visa options could allow around 60,000 Indian professionals to work in the UK each year, increasing the exchange of skills and expertise between the two countries.