Free trade with India 'not a silver bullet'

A free trade agreement between India and New Zealand is not a "silver bullet" and Kiwi firms should be pressing ahead with trying to do business there, the trade commissioner to New Delhi says.

Richard White spoke briefly at an ANZ-sponsored event yesterday about doing business with India, which was also attended by Trade Minister Tim Groser and the new Indian High Commissioner to New Zealand, Avanindra Kumar Pandey.

Mr Pandey – who has been in the job for just 12 days – at one point appeared confused as to what the point of the exercise was: to encourage New Zealand businesses to see the potential of India as an export market.

He told the audience: "India doesn't want very much from New Zealand, but my effort is to see what New Zealand wants from India and try and give them that."

This was clearly not in line with how New Zealand Trade and Enterprise sees it.

When asked by NBR ONLINE whether it was a one-way relationship, he said: "Best not to comment on what the high commissioner said. He's the new high commissioner here.

"I'd like to think we do have things that India wants, and it's out job to identify what those things are."

India – with a population of 1.4 billion and a growth rate of 6.9% a year – is New Zealand's seventh largest export market and our 17th largest trade partner.

Exports to India have skyrocketed over the past decade, rising from less than $200 million in 2001 to more than $900 million last year.

Prime Minister John Key travelled to India last month for three days of talks on the potential FTA.

Mr White says it is going to take a lot longer than previously thought to get the FTA into action, but businesses shouldn't be sitting around waiting.

"It's not going to be a silver bullet. We can't simply reply on FTA to solve the issues of getting our companies into India.

"We have to get on the front foot and do what we need to do within the current regulatory environment."

Victoria University's Dr Val Lindsay, who contributed to ANZ's research paper on the issue, says there is nothing simple about doing business with India.

For example, delays in being paid is a concern for many New Zealand businesses. The money eventually comes through but businesses need to follow the right systems. 

Dr Lindsay says it is especially hard for small businesses because it must be a long-term investment to get the rewards.

"Once they are in the Indian market and operating successfully, the opportunities are immense."

More New Zealand companies are using India as a springboard to reach the rest of the world, says Dr Lindsay.

"The clients they deal with in India are themselves globalising.

"The Indian companies go into new markets, and often take their New Zealand supplier with them."