All new trade talks halted pending rethink about free trade agreements.

There is fresh uncertainty over the likelihoods of a free trade agreement with India any time soon after it hit the pause button on all new trade talks.

According to a report by an economic think tank in New Delhi, the Indian government has halted all new trade negotiations pending the outcome of a strategic review of its approach to free trade agreements.

“While FTAs can significantly reshape India’s trade relations, their success depends on careful planning, negotiation and execution,” the report from the Policy Circle think tank says.

“This is why the government is looking to revise its existing model.”

Recent agreements with Australia and the United Arab Emirates will be reviewed to “identify potential shortcomings and areas for improvement … scrutinising India’s gains and losses in each case, aiming for a more balanced outcome in future trade deals.”

New Zealand meat exporters have paid close attention to Australia’s agreement with India, which scrapped high tariffs on sheepmeat imports. NZ exporters continue to struggle to make headway in the Indian market because of those tariffs.

The report notes concerns surrounding larger gains for exporters from countries India has concluded trade agreements with, especially in the case of its free trade agreement with the southeast Asian countries of ASEAN, than for Indian exporters in those countries’ home markets.

In Wellington, the Ministry of Foreign Affairs and Trade said it is aware of the review but neither it nor the Policy Circle report indicated a finish date.

The review comes shortly after Prime Minister Christopher Luxon’s planned visit to New Delhi in October was bumped till the first part of next year.

Labour’s trade spokesperson, Damien O’Connor, said he was not aware of the review from his time as trade minister but was not surprised the Indian government would want to look again at its trade policy following the country’s recent elections.

He said Luxon’s goal of completing a trade deal with India in the National-led government’s current three-year term always looked like a long shot and it isn’t getting any easier.

“It is an ambitious goal … those agreements that India has been pursuing have been very difficult to conclude and even the Australian agreement is not what we would call comprehensive.”

O’Connor noted the review by the Indian government includes further consideration of environmental outcomes, labour rights and rights of indigenous people and gender in trade agreements.

These are new considerations for trade negotiators and mirror the Labour government’s Trade for All agenda, which attempted to incorporate similar goals into NZ’s trade agreements both for NZ businesses and those of its trading partners.

“What I attempted to do as trade minister and David Parker before me was to bring those international signals back to our exporters in a clear and honest way.

“It was not always accepted but we are now starting to see other people are saying this as well.”

One exporter spoken to by Farmers Weekly said an equally plausible explanation for the review’s attention to such issues is that it is seeking to come up with a strategy to spike such demands made of India in trade negotiations, such as those with the European Union that consider such issues a higher priority than the Indians have to date.

At the World Trade Organisation, India has often argued its status as a developing economy means it should not be held to the same environmental and labour standards as wealthier countries.

“You would have to see the detail of what they are proposing around those changes,” the exporter said.

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