NZ-India Free Trade Agreement
Thinking about India? The first conversation is free.
Get in touchNew Zealand and India signed a Free Trade Agreement on 27 April 2026, and both countries have now ratified it. It enters into force on 20 October 2026. From that date, every tariff on Indian goods coming into New Zealand drops to zero immediately; tariffs on New Zealand goods going into India come down in stages, starting at 57% of export lines from day one.
Testing whether the market stacks up, incorporating in India, registering for tax in both countries and setting intercompany pricing takes months, not weeks.
We are a New Zealand consulting practice working with an established partner firm of Chartered Accountants and Company Secretaries in India. You deal with us. We handle both sides.
Whether India stacks up for you at all - with the numbers behind the answer, including the honest version where the answer is no.
Whether you need an Indian entity - or whether a distributor, an agent or an Employer of Record gets you further, faster, and at what point that stops being true.
What it costs to set up and to keep running - modelled over three years, not just the year you incorporate.
What the FTA actually changes for your goods, and when - which is less immediate than most of the coverage suggests, and matters more for some products than others.
What has to be in place at both ends before you trade - registrations, transfer pricing, and the New Zealand obligations that come with owning something offshore.
New Zealand businesses looking at India, exporters weighing up whether to sell direct instead of through a distributor, service businesses considering a team in Bengaluru or Pune, manufacturers assessing supply, and owners who have been approached by an Indian partner and want to know whether it is real.
And New Zealand businesses building a team there rather than selling there. If you are looking at India to do work for your own business - software development, finance and back office, customer support - that is a different exercise entirely, and we treat it as one.
If you are at the "we have been talking about India for a while but have not done the numbers" stage, that is exactly where we are most useful.
Before you commit a dollar, we build the business case.
Market sizing and realistic revenue assumptions. Landed cost modelling including duty, freight and GST. Distributor versus own-entity comparison, with the numbers behind each. What it actually costs to establish and run a presence for three years. Where the money goes if it goes wrong.
If what you are weighing up is a captive unit rather than a market entry, the study changes shape: salary benchmarking by role and city, attrition assumptions, property and employer costs, and a three-year total cost of ownership modelled against doing the same work here. Bengaluru, Hyderabad, Pune, Chennai and the tier-two cities are genuinely different propositions on both cost and retention. We also compare hiring through an Employer of Record against incorporating, and tell you the point at which an entity becomes cheaper - starting through an EOR is often the right call, because unwinding it is a conversation rather than a liquidation.
You get a business case you could put in front of your bank, your board, or your own family, including an honest view on whether the answer is no. Sometimes it is, and finding that out for the price of a feasibility study is the cheapest outcome available.
If the answer is yes, structure determines your tax outcome for the next decade, and it is expensive to unwind.
Choosing your vehicle: a private limited subsidiary, branch office, liaison office, or LLP. The differences are substantial. A branch office needs regulatory approval, is restricted in what it can do, and is taxed as a foreign company at a materially higher rate than an Indian domestic company. For most New Zealand SMEs the subsidiary is the right answer, but you should know why, not just be told.
How you fund it - debt or equity - and what that means at both ends. Intercompany agreements written before trading starts rather than reconstructed at audit. Transfer pricing policies that will hold up to both Inland Revenue and India's tax authority. And modelling what a rupee of Indian profit actually lands as in New Zealand after Indian tax, withholding and imputation.
India reset its safe harbour rules this year. Software development, IT-enabled services, KPO, and contract R&D now sit in one category at a uniform 15.5% margin on operating expenses, and the eligibility threshold has lifted from Rs 300 crore to Rs 2,000 crore. Approval is automated, and the election runs for five years. For most New Zealand captives, this replaces a costly benchmarking study with a simple election, at a fraction of the cost and without the dispute risk.
Eligibility depends on how the Indian entity is characterised, not its size. The Rs 2,000 crore ceiling is roughly NZ$400 million of transaction revenue. What decides it is whether the Indian entity is genuinely low-risk: work directed from New Zealand, IP owned in New Zealand, commercial risk carried in New Zealand. Where decisions and IP have migrated to India over time, the entity is no longer routine, and the regime does not apply. Working out which side of that line you sit on is the first step, and it is not a question a form can answer.
Electing safe harbour bars the Mutual Agreement Procedure under the tax treaty for that transaction: certainty in exchange for a dispute route you would likely never use, but it should be a deliberate choice, not a default. The election is filed by 30 June of the first year, so it belongs in the conversation at incorporation, not after the first tax return.
Incorporation, ROC filings, director identification and digital signatures, PAN and GST registration, and FEMA reporting are all delivered through our India partner firm, coordinated by us, so you are not managing two advisers who have never spoken.
The obligations that follow you home, which are easy to miss if nobody is looking for them.
Controlled foreign company (CFC) rules. Once you own an Indian subsidiary, Inland Revenue can tax you on its profits even before any of the money comes back to New Zealand. There is an exemption where the Indian entity is genuinely trading rather than sitting on passive income, but the test behind it has to be applied and documented every year - not once at the start.
Limits on interest deductions (thin capitalisation). There are caps on how much of the group's debt you can hold in New Zealand to fund the Indian operation, and on how much of that interest you are allowed to deduct here.
Transfer pricing documentation for the New Zealand parent, not just the Indian entity. The pricing between the two companies has to stand up at both ends, and the paperwork proving it sits here as well as there.
Foreign tax credits and getting profits home. Making sure tax already paid in India is credited against your New Zealand bill, and planning how and when profits are brought back.
Consolidated group reporting. Combining the Indian entity into your New Zealand accounts - translating rupees to dollars, and stripping out the transactions between the two companies so nothing is counted twice.
Plus ongoing coordination with your Indian compliance calendar, so nothing falls between the two jurisdictions.
Market access and duty rates are one thing; permanent establishment risk, withholding tax and transfer pricing are governed by the NZ-India Double Tax Agreement and each country's domestic law. They need looking at separately, and the FTA does not help you with them.
The Income-tax Act 2025 took effect for the 2026-27 financial year. The underlying principles largely carry over, but every section reference has changed, which means a good deal of the guidance still circulating online now cites repealed provisions. Worth checking who is advising you, and from what.
Led by a senior management consultant, and you deal with senior people throughout.
An established India partner firm, not a referral you are left to manage.
We advise on the New Zealand consequences, not just the Indian setup. That is the half most people miss.
SME-scale advice at SME-scale fees. We are not a Big Four practice and we do not price like one.
Based in Te Whanganui-a-Tara Wellington.
We do not publish a price list for this work, because an export feasibility for one product into one city is a different job from assessing a captive unit across several cities. Answer a few questions about what you are weighing up, pop in your email, and we will send you a figure broken down line by line.
Work out your priceShort answers below. Several of them end in "it depends on your situation", because they genuinely do. What we can tell you is which detail decides it, and establishing that is usually the first thing we do.
A sales presence, an office, or a team doing work for your own business.
Not always, and often not first. An Employer of Record lets you hire people in India without incorporating, and a distributor or agent can sell for you without one either. An entity earns its place when its running cost drops below what the alternative charges you, or when you need control you cannot get another way. We model where that point sits, because leaving an EOR is a conversation and leaving an entity is a liquidation.
Longer than the incorporation, which is the part people budget for. Registrations, banking, tax registration at both ends and documenting your intercompany arrangements are what set the real timeline. Think months rather than weeks, and start before it feels necessary.
The setup fee is rarely what surprises people. It is the annual compliance around it - statutory filings, audit, transfer pricing documentation, and the New Zealand obligations that come with owning a foreign company. We give you a three-year running cost rather than a setup quote.
Worth asking before you incorporate rather than after. Closing an Indian entity has its own timeline and cost, which is one of the better arguments for starting through an EOR or a distributor while you are still testing whether the market is there.
Bengaluru, Hyderabad, Pune and Chennai are genuinely different on salary, attrition and property, and the tier-two cities are different again. For a team doing your own work, attrition usually costs more than salary does, so the cheapest city on paper is often not the cheapest in practice.
Us. We are a New Zealand consulting practice working with an established partner firm of Chartered Accountants and Company Secretaries in India. You are not left managing two advisers who have never spoken to each other.
Exporting goods or services, direct or through someone on the ground.
Getting there, but not uniformly. The agreement enters into force on 20 October 2026, and from that date 57% of New Zealand's export lines go duty-free immediately, including wood, wool, sheep meat and raw hides. The rest phases down over three to ten years, reaching 82% duty-free eventually; a handful of sensitive categories like dairy and most meat stay outside the deal altogether. What matters is where your specific goods sit in that schedule, which has a definite answer once we know how they are classified.
Two things decide it: how your goods are classified, and whether they meet the agreement's rules of origin. Origin rules are what stop goods being routed through a country to claim a preference they have not earned, so meeting them means being able to evidence where your inputs came from. Classification is worth settling before you price anything.
Usually, through a distributor or an agent. The trade-off is margin and control against speed and risk, and the tax treatment differs between the two - an agent acting on your behalf can create obligations for you in India that a distributor buying from you does not. Worth understanding before you sign anything.
Indian indirect tax applies to sales into India regardless of the FTA, which reduces tariffs rather than domestic taxes. Whether you need to register there depends on what you sell and how. This is the part most often missed by people who read that the agreement makes trade cheaper.
Importing goods, or having work done there for your business.
The opposite of what you might expect: this side is not phased at all. From 20 October 2026, every tariff line on Indian goods coming into New Zealand drops to zero at once. What you still need is evidence the goods qualify under the agreement's rules of origin, which usually means documentation from your supplier that they may not currently produce. Raise it with them early rather than at the border.
Sometimes. We can check the entity exists, is in good standing and is what it says it is, and look at whether the commercial proposition holds up on the numbers. That is inexpensive relative to finding out the hard way.
Possibly quite a lot. If your Indian team has grown into making decisions or holding intellectual property, the entity may no longer be the low-risk service provider your transfer pricing assumes, and that is exactly where the simplified safe harbour route stops being available. Better to establish which side of that line you are on before someone else does.
Whenever suits you. The agreement takes effect on 20 October 2026, and feasibility, incorporation, registrations at both ends and intercompany pricing take a few months end to end, so that is worth factoring into your planning.
Tell us what you are weighing up. The first kÅrero is free, and we will tell you honestly whether India is worth the effort for your business - and whether we are the right people to help.
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