India has kept dairy products outside the ambit of the free trade agreement (FTA) concluded with New Zealand on Monday, ensuring that products such as milk, cream, whey, yoghurt and cheese from New Zealand will not receive duty-free access to the Indian market. However, New Zealand exporters will be allowed duty-free access for certain dairy and other food ingredients meant exclusively for re-export under the pact.
Opening up the dairy sector has long been a politically sensitive issue in India, and the government has consistently maintained that it will not liberalise the sector at the cost of nearly 80 million domestic dairy farmers. India had adopted a similar stance in the recently concluded India-UK trade agreement, keeping dairy and agriculture outside the scope of the pact.
In a statement, the commerce ministry said that to safeguard farmers and domestic industry, market access under the FTA excludes dairy products such as coffee, milk, cream, cheese, yoghurts, whey and caseins, along with onions, sugar, spices, edible oils and rubber. India currently imposes a 30% import duty on milk, 60% on skimmed milk, 40% on whey and 33% on cheese from New Zealand.
“Our farmers stand to gain significantly—both through improved market access in New Zealand and through technology collaboration. Similarly, fishermen and dairy producers will also benefit. By offering a very small, conditional tariff rate quota (TRQ) with concessional duty on a limited number of products, we have been able to open up large opportunities for market access and technology collaboration, and benefit from New Zealand’s expertise,” Commerce Minister Piyush Goyal said at a media briefing.
According to the Global Trade Research Initiative (GTRI), New Zealand’s dairy exports to India were limited to just $1.07 million in FY2025. These included milk and cream ($0.40 million), natural honey ($0.32 million), mozzarella cheese ($0.18 million), butter ($0.09 million) and skimmed milk ($0.08 million). Dairy products account for nearly 30% of New Zealand’s total exports. In the first 11 months of 2025, the country exported dairy products worth about $24 billion.
The exclusion of dairy has drawn criticism from opposition parties in New Zealand, who have described the agreement as neither free nor fair.
“The India FTA would be New Zealand’s first trade deal to exclude our major dairy products—including milk, cheese and butter. In the year to November 2025, exports of these products were worth around $24 billion, or 30% of our total goods exports,” said Winston Peters, founder of the right-wing New Zealand First party.
Apart from dairy, India has also placed several other products in the exclusion list, including animal products (other than sheep meat), vegetable products such as onions, chana, peas, corn and almonds, sugar, artificial honey, animal, vegetable or microbial fats and oils, arms and ammunition, gems and jewellery, copper and copper articles (cathodes, cartridges, rods, bars and coils), and aluminium and aluminium articles (ingots, billets and wire bars).