National avers better engagement with India

Todd McClay is a seasoned diplomat, a former Minister of the Crown and currently National MP and Agriculture and Trade Spokesperson. He understands the importance of trade and commercial ties with India. INL Photo by Nikita Patil

Venkat Raman
Auckland, June 30, 2023

National Party Leader Christopher Luxon, who is also the Leader of the Opposition, has said that he cannot wait to restart Free Trade Agreement (FTA) Talks with India- that is after he becomes the Prime Minister. He hopes that he will do so on October 14 when the nation goes to the polls.

His Agriculture and Trade Spokesperson (and former Foreign Trade Minister) Todd McClay was equally upbeat when he visited our offices yesterday (June 29, 2023).

“My first overseas visit as an incoming Minister will be to India. I will engage with the leaders in New Delhi and reopen fresh negotiations for an FTA. It could be a long wait, but we cannot afford to ignore India as a valuable trade partner,” he said.

The video and audio clips attached to this story carry his Statement in full.

He was accompanied by former National Party List MP Kanwaljit Singh Bakshi.

An attractive business destination

Both Mr Luxon and Mr McClay are right in stressing the significance of getting closer to India and exploiting the immense commercial potential for mutual benefit. Mr Luxon spoke about areas of mutual interest at his Party’s India Summit on April 18, 2023, in Auckland.

“India is one of the most important countries in the world and New Zealand, in my view, is the best country in the world, so it makes sense that our two nations deepen their ties and cooperate more. With a population of more than 1.4 billion people, India’s economy grew by $560 billion last year and by 2030 India is expected to become the third largest economy in the world,” he said and cited further development of opportunities for skilled workers, other employment linkages and tourism growth as viable examples.

India today is a strong economic power and comprises the largest consumer market and a skill base that can satisfy any requirement anywhere in the world. Already the fifth-largest economy in the world,  India is poised to maintain robust growth and become self-sufficient.

Given these emerging factors, meeting the expectations of India as an FTA partner will not be easy. India today looks more to exporting its goods and manpower and correcting its balance of payments, rather than open its economy to imports.

Mr Luxon made that point from New Zealand’s viewpoint.

Significance of trade

“Trade is largely how New Zealand earns its income. Therefore, trade and the underpinning rules-based international order are vital to us. When New Zealand does not pay its way in the world, which is happening right now, we borrow more and lose economic momentum. That means simple but costly changes, like a weaker currency. A weaker currency cannot buy as much, will not travel as far and does not fill up the car as a stronger currency does,” he said.

We have often said that New Zealand must overcome several obstacles before it can negotiate a successful trade pact with India. First, it must shed its over-indulgence on agriculture, dairy and meat exports, which Mr McClay understands would slow down talks.

“Concessional tariff or no tariff on our agricultural, dairy and meat exports to India would be in the long term and we should be prepared to wait. But in the short term, we must learn to deal with India on common grounds. We are prepared to wait,” he said.

New Zealand businesses used to complain about the depressing and frustrating bureaucracy, cumbersome procedures and corruption that they are obliged to confront in their attempts to break into the Indian market. These are things of the past. The Narendra Modi government is business smart and understands the significance of global trade.

The Indo-Pacific Rim

New Zealand can also play an important role in promoting the interests of the countries of the Indo-Pacific Rim. Mr McClay, as an architect of the Trans-Pacific Partnership, understands the significance of bringing India to the core of the Pacific.

India’s role in the Indo-Pacific is considered crucial by Australia, Japan and the United States. New Zealand will enter that equation when the National Party forms the government. However, despite New Delhi’s presence in the Indian Ocean, maritime security has remained outside of India’s strategic interests, concerns, and thinking, due to its continental threats. Hence, the Indo-Pacific is a new domain in India’s foreign policy engagements, representing a shift in New Delhi’s strategic environment, expanding its threats solely from its continental borders to its maritime space.

Mr McClay understands that New Zealand should take a holistic and long-term view while revisiting its relations with India. There is a secure and prosperous future for both countries if they work together with a common purpose.

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