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Key seeks Indian summer without FTA

NZ NewswireNZ Newswire 23/10/2016 Dave Williams
Prime Minister of New Zealand John Key © Reuters Prime Minister of New Zealand John Key

Prime Minister John Key heads to India this week, trying to drum up business and with an eye on the future of the economic giant.

His visit is a flying one - essentially just two-and-a-half days of engagements, which includes meeting with counterpart Narendra Mode.

But he says it is aimed at growing existing ties and looking for more ways the countries can work together, despite a free-trade deal looking some way off.

Mr Key will be accompanied by about 34 industry reps from a range of sectors, including well outside our main commodity exports.

"I can confidently say there are increasing opportunities for New Zealand businesses ... from education, manufacturing and food and beverage to IT and aviation," Mr Key says.

Free-trade talks started in 2010 and there have been 10 rounds since, but officials say they aren't even close to reaching a deal without the political will from India.

New Zealand doesn't export a lot of dairy products to India - the country has a policy of being self-sufficient for milk production and protecting its smaller farmers, and it puts an average 33.5 per cent tariff on dairy products.

Tariffs on some agricultural products can be as high as 100 per cent, which makes it uneconomic for outsiders.

Officials say they don't want to really compete with Indian growers, but with between 40 and 50 per cent of food there going to waste, they say there is a lot of unfulfilled demand and New Zealand storage and distribution systems could help.

But despite no FTA there has been a dramatic increase in the trade of services - in New Zealand's favour - mainly driven by education.

Five years ago, Mr Key was in India and launched the NZ Inc India Strategy, which aimed to grow this country's exports there to $2 billion by 2015, among other things.

That hasn't happened. However, once you thrown in services exports the two-way trade between the two is worth $2.4b.

New Zealand is winning on the services - we exported $1.068b in the last financial year (most of which was education travel services) while we bought $230 million worth of services from India.

India is now our second-largest source of international students.

That's brought its own problems, with Immigration NZ saying fraudulent visa applications have soared.

Last week, the Asia New Zealand Foundation published a report on relations by former high commissioner to India, Graeme Waters, who also pushed the idea that it just doesn't have to be about commodities.

"It is beyond the goods market and into the realms of services where each side can capture the other's imagination," he says.

That's in areas such as IT, fashion design, filmmaking and aviation, however New Zealand as a shooting destination for Bollywood movies just hasn't happened.

There is currently no direct air service between the two countries, but last year an air services agreement allowed codeshare flights via Singapore.

Trade officials are also touting a growing tourism market for Indian visitors.

Last year 46,000 Indians visited New Zealand and that is expected to grow to 93,000 by 2022. However, those figures are dwarfed by the 921,000 expected to come from China by then.

The Asia NZ Foundation notes a FTA may not be necessary.

"New Zealand has little to offer India in terms of tariff reductions - what other cards can we play?"

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