India is a key market for us. I believe that in order for our companies to be considered global, we need to be in India. NZ does not have an FTA with India but we want our relationship with India to develop by successfully concluding a quality bilateral FTA.
In an exclusive interview, Ralph Hays, Consul General and Trade Commissioner of New Zealand, outlines why India is an important market for New Zealand’s businesses. By Steena Joy
How does New Zealand see India as a trade partner?
India is a key market for us. I believe that in order for our companies to be considered global, we need to be in India. NZ does not have an FTA with India but we want our relationship with India to develop by successfully concluding a quality bilateral FTA. With India’s attractive demographics and young population, the growth opportunities are immense. There is also the Regional Comprehensive Economic Partnership (RCEP) which is a mega trade pact among 16 countries aiming to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights. The 16-member bloc RCEP comprises 10 ASEAN members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners India, China, Japan, South Korea, Australia and New Zealand.
As far as the India market is concerned, NZ is committed. I think we are the second largest consulate here in Mumbai with around 85 people – which is very impressive for a small country like ours. We also have a high commission in Delhi. We continue to work on the FTA and the RCEP and see it as a good approach.
Which are the main NZ products that have found a market in India?
The bilateral trade between India and NZ is worth almost NZ$ 2.5 billion – the main products into India are logs, fruit and wool. Fruit is primarily kiwi fruit – Zespri is one of our key customers here and the company is doing quite well…the challenge for Zespri here was the distribution channels which are quite different from other markets where you can sell to a large supermarket.chain. Here it is more diversified. So though Zespri had a slow start, now they are doing well so that’s a good story.
What about India’s trade to NZ?
This is slightly less – around NZ$ 600 million, mostly in pharmaceuticals, precious metals and jewellery. It would appear that the services side is growing against the products side,which makes sense because there are certain niche products which you can import into India but it is a challenge considering India’s 150 per cent import duty on NZ wines. So you end up having the products in high-end hotels and not on the retail shelves. NZ being small we do not have a large volume of products so our target is the high-end niche quality products. So it is about finding the niche like Gold Zespri or like the company selling lamb to The Taj group of hotels. India and NZ have a lot of commonalities like the English language, cricket, etc so that helps. Selling high-end high value products is what we are looking at in India.
Are NZ businesses looking to invest in India?
We recently had a trade mission to India with around seven companies in special manufacturing like stainless steel, food processing and construction and three or four of these are looking to invest in India. We are looking at the knowhow and expertise aspect as it is difficult to ship products like steel to India and it makes no sense when you can source it locally. Being an island nation we rely on exports. So NZ companies are basically looking to set up an entity here in India, tapping into the local resources and using NZ expertise to supply locally or to export to other markets from here.
We are looking at partnerships especially in agriculture equipment like harvesting, seed rotation, etc. Dairy is still a challenge for us due to the import duties, but NZ companies with expertise in products like pharmaceutical grade lactose are interested as it can be used in India’s huge pharma sector.
In Kochi airport, another NZ company looking to expand here is Glidepath which is into baggage handling machinery. With over 40 years experience, Glidepath has completed 700+ projects in more than 65 countries and has a team of dedicated team of specialists. These projects have ranged from small manual systems to large fully automatic software-driven baggage sortation systems for some of the world’s busiest international airports. Glidepath is interested in Tier II and III airports in India and the new airports that will come up under Modi’s Regional Connectivity Scheme (RCS). Aviation schools is also another area where NZ expertise can work in India.
2017 data shows that:
– India is now New Zealand’s ninth largest trading partner at NZ$ 2.5 billion two-way trade, up from 10th position last year.
– From 2011-2016 NZ-India two-way goods trade increased 42%.
– NZ services exports to India are now worth over NZ$ 1 billion for the first time. International education makes up a big part of NZ’s services export.
– Last year, more than 28,000 Indian students came to study in New Zealand, making India the second largest source of international students for NZ.
– Year ended December 2016: logs were NZ’s top exports to India at NZ$ 243 million followed by wool at 41 million.
– Year-ended December 2016: medicines were NZ’s biggest import from India at NZ$ 76 million, followed by precious metal jewellery at NZ$ 32 million.