THE CONTEXT: During New Zealand Prime Minister Christopher Luxon’s visit to India in March 2025, both countries signed a defense cooperation MoU, agreed to launch FTA negotiations in April 2025, and addressed Indo-Pacific security concerns. The bilateral talks between PM Modi and PM Luxon also resulted in agreements on economic cooperation, education, sports, and horticulture. At the same time, PM Modi raised concerns about pro-Khalistan activities in New Zealand.
GEOPOLITICAL PARADIGM SHIFT IN INTERNATIONAL RELATIONS:
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- Replacement of Rules with Power: UNSC paralysis over Ukraine and Gaza exemplifies institutional irrelevance, with veto politics blocking consensus. China’s “no limits” partnership with Russia and US “de-risking” strategy post-IRA reflect power-centric statecraft. SCO’s expansion (Iran in 2023, Belarus in 2024) and AUKUS (2021) signal preference for exclusive security architectures.
- South China Sea: China’s rejection of PCA ruling (2016) and militarization of reefs (2020-2025) underscore “might over right.”
- WTO Dispute Settlement Crisis: US blockage of appellate body appointments since 2019 led to 27 unresolved trade disputes by 2025.
- “The post-1945 liberal order is now a zombie system—alive in form but dead in function”.
- UNCTAD 2025 Report: “Coalitions of convenience, not rules now shape global trade governance”.
- Primacy of Security Over Economic Interests: The New Zero-Sum Calculus
- Tech decoupling: US CHIPS Act (2022) blocked $50B+ semiconductor exports to China by 2025; China’s “dual circulation” strategy retaliated with rare earth export curbs.
- Energy security trumps climate goals: The EU’s revival of coal plants (+12% emissions) from 2022 to 2024 amid the Russia-Ukraine war.
- Food nationalism: India’s 2024 wheat export ban and Indonesia’s palm oil restrictions (2023) disrupted global Agri-value chains.
- Global defense spending hit $2.5T in 2024, with Indo-Pacific nations (India +13%, Japan +9%) leading growth.
- Cost of securitization: US-China trade fell to $575B in 2024 from $659B in 2022; EU’s CBAM raised steel import costs by 20%.
- Every major power now sees trade through a national security prism, making win-win outcomes obsolete.
- IMF 2025 Warning: “Securitization could shrink global GDP by 1.8% annually if tech bifurcation accelerates”.
- Replacement of Rules with Power: UNSC paralysis over Ukraine and Gaza exemplifies institutional irrelevance, with veto politics blocking consensus. China’s “no limits” partnership with Russia and US “de-risking” strategy post-IRA reflect power-centric statecraft. SCO’s expansion (Iran in 2023, Belarus in 2024) and AUKUS (2021) signal preference for exclusive security architectures.
Protectionism & Resilient Supply Chains: The “New Abnormal” in Globalization
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- Friend-shoring: US-Mexico trade surged to $860B in 2024 (+27% since 2020); India’s “China+1” strategy diverted $44B trade to Vietnam/Thailand.
- Strategic stockpiling: EU’s 2024 Critical Raw Materials Act mandates 30% domestic recycling; India’s 1M tonne lithium reserve (2025).
- Coercive interdependence: China’s 2023 gallium export curbs exposed 90% global tech dependency.
- India’s PLI schemes: Generated $134B production in electronics (2024) and 1.2M jobs, cutting Chinese smartphone imports by 33% [Original Article].
- Digital trade blocs: The India-EU Digital Partnership (2025) aims to localize data to counter Chinese tech dominance.
- Connector countries under stress: Vietnam faces 15% tariff risk on US-bound exports with Chinese inputs; Mexico’s auto exports dropped 8% in Q1 2025.
India’s Strategic Navigation: Opportunities & Challenges
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- Non-aligned 2.0: Joined IPEF trade pillar (2023) but stayed out of NATO’s Indo-Pacific outreach (2024).
- Plurilateralism: IMEC corridor (2023) and Indo-Pacific Oceans Initiative (IPOI) counter China’s BRI but face funding delays.
- Khalistan issue: NZ’s 2024 “Free Speech vs. Sovereignty” dilemma mirrors Canada’s 2023 crisis; India’s diaspora engagement budget rose to ₹4,200Cr.
STRATEGIC CONVERGENCE: INDIA-NEW ZEALAND PARTNERSHIP IN THE INDO-PACIFIC
Operational Synergy:
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- Maritime Security Collaboration: Joint naval exercises (e.g., India’s INS Tarini port call in Christchurch, Dec 2024) and New Zealand’s endorsement of India’s entry into Combined Maritime Forces (CMF) enhance interoperability against piracy and IUU fishing.
- Indo-Pacific Oceans Initiative (IPOI): NZ’s intent to join IPOI aligns with India’s focus on maritime resource management and disaster resilience. This counters China’s “island-building” in South China Sea.
Balancing China’s Expansionism:
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- While NZ maintains a $24B trade relationship with China, its participation in India-led initiatives like IPOI signals strategic hedging against Beijing’s debt-trap diplomacy in Pacific Islands (e.g., Cook Islands-China pact).
- ASEAN Centrality: Both nations endorsed ASEAN-led mechanisms (ARF, EAS) to preserve multipolarity, contrasting China’s ASEAN divide-and-rule tactics.
Institutional Parallels:
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- Shared Westminster parliamentary traditions and Commonwealth legacy enable trust in joint counter-terrorism efforts (e.g., mutual condemnation of 2008 Mumbai and 2019 Christchurch attacks).
- Five Eyes Dilemma: NZ’s intelligence-sharing with the US-led bloc creates opportunities for India to access Pacific maritime data, despite NZ’s reluctance to openly confront China.
Diaspora as Soft Power:
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- NZ’s 3 lakh Indian diaspora (6% of population) aids cultural diplomacy but complicates ties due to Khalistan referendum tensions. India’s ₹4,200Cr diaspora engagement budget (2025) seeks to mitigate radicalization risks.
KEY COMPONENTS OF 2025 MOU:
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- Joint Military Exercises: Focus on HADR (Humanitarian Assistance and Disaster Relief) in cyclone-prone Pacific Islands.
- Defence Industrial Roadmap: Co-development of maritime surveillance systems (e.g., India’s Coastal Radar Network) and NZ’s expertise in Antarctic patrol vessels.
- Staff College Exchanges: Leverage NZ’s UN Peacekeeping Training Centre (NZDF) and India’s National Defence College for counter-insurgency training.
New Zealand’s Quad Calculus & Minilateral Engagements
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- NZ’s non-Quad stance balances “Five Eyes” obligations with China trade (28% of exports). Contrasts Australia’s AUKUS pivot but aligns with India’s “multi-alignment” approach.
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- Alternative Minilaterals:
- India-NZ-Japan Trilateral: Focus on Pacific Island infrastructure to counter China’s “Health Silk Road”.
- Supply Chain Resilience Initiative (SCRI): Collaboration on pharma APIs and dairy tech to reduce Chinese dependencies.
- “NZ’s ‘Pacific Exceptionalism’ allows India to expand influence without antagonizing China, creating a third pole in Oceania geopolitics.”
- Alternative Minilaterals:
DIPLOMATIC-ECONOMIC CHALLENGES IN INDIA-NEW ZEALAND RELATIONS:
Free Speech vs. Sovereignty: The Khalistan Conundrum
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- New Zealand’s Bill of Rights Act 1990guarantees freedom of expression, enabling groups like Sikhs for Justice (SFJ) to conduct symbolic referendums. This clashes with India’s Section 124A IPC (sedition) and Unlawful Activities Prevention Act (UAPA), which criminalize secessionist activities.
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- 2024 Auckland Khalistan referendum (8,000 participants) vs. India’s 2023 ban on SFJ under UAPA. NZ Police deemed the event lawful under Public Assemblies Act 2022, highlighting normative asymmetry.
Diaspora Radicalization Risks:
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- 3 lakh Indian diaspora in NZ (6% population) face radicalization threats, with SFJ exploiting Section 14 NZ Human Rights Act to fundraise. Contrasts India’s ₹4,200Cr diaspora engagement budget (2025) for de-radicalization.
- “Diaspora politics creates dual sovereignty traps – host nations prioritize civil liberties, while origin states demand nationalist loyalty.”
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- Canada’s 2023 crisis over Hardeep Singh Nijjar’s killing shows how diaspora issues can escalate into “trade-terrorism trade-offs”(Canada-India FTA stalled).
Dairy Market Access: Protectionism vs. Geoeconomics
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- India’s Dairy Sector: 70M+ livelihoods, 2-acre average herd size (vs. NZ’s 355-acre). 2023 NDDB Reportwarns 10% import penetration could displace 7M farmers.
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- RCEP Lessons: India’s 2019 exit saved dairy from zero-bound tariffs; NZ’s dairy exports to RCEP nations grew 18% post-2020, validating protectionism.
FTA Sticking Points:
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- Tariff Asymmetry: NZ seeks 0% duty on dairy (current 35%), while India’s avg. agri-tariff is 113.5% (WTO). NZ’s $24B China dairy trade vs. India’s $0.57M imports from NZ.
- GTRI Warning: NZ’s 2024 milk production (22B liters) could flood India’s $180B market, undermining Operation Flood gains.
Strategic Autonomy Dilemmas: RCEP Exit & Multi-Alignment
RCEP Fallout:
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- Trade Deficit Concerns: India’s $85B deficit with China (2024) would have worsened under RCEP’s Cumulative Rules of Origin, allowing Chinese goods via ASEAN.
- GTRI Analysis: India’s 2024 PLI scheme generated $134B electronics output, offsetting RCEP’s “China+1” supply chain losses.
FTA Paradox:
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- US Pressure: 2025 US-NZ Climate-Trade Pact pushes NZ to demand dairy access in India-NZ FTA, mirroring US-India IPEF tensions.
- Asymmetric Gains: NZ’s 2.3% avg. tariff offers India limited upside ($538M exports), while India’s 17.8% tariffs face pressure.
THE WAY FORWARD:
Sector-Specific FTA Architecture with Dairy Safeguards
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- Adopt “Negative List + Tariff Rate Quotas (TRQs)”for sensitive sectors (dairy, agriculture), allowing limited NZ imports via NDDB for institutional use (mid-day meals, ICDS) while protecting 70M rural livelihoods.
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- Precedent: India-Australia ECTA’s TRQ system for lentils (2022) increased imports by 37% without market disruption.
Tech-Enabled Trade:
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- Leverage NZ’s AgriZeroNZ emission-reduction tech under 2025 MoU to boost Indian cooperatives’ productivity, creating ₹8,400Cr carbon credit market by 2030.
Defence Industrial Corridor in the Indo-Pacific
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- Establish India-NZ-Australia Trilateral Maritime Industrial Partnershipfocusing on:
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- Co-development of modular ice-class patrol vessels (NZ’s Antarctic expertise + India’s shipbuilding)
- Joint production of coastal surveillance radars for Pacific Islands (countering China’s Solomon Islands base).
- Precedent: India-Japan-US-Australia’s Quad Critical & Emerging Technology Working Group (2023).
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Diaspora 2.0: Digital De-Radicalization Ecosystem
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- Launch “Digital Attachés”program under MEA’s ₹4,200Cr budget to monitor/engage diaspora through:
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- AI-driven sentiment analysis of 300+ NZ-based social media groups
- e-Sampark Portal offering grievance redressal (modeled after CPGRAMS).
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- Negotiate India-NZ Mutual Legal Assistance Treaty (MLAT) focused on cybercrime, enabling real-time data sharing on SFJ funding patterns.
Climate-Smart Connectivity Infrastructure
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- Develop “Carbon-Neutral Air Connectivity” by 2028 through:
- Sustainable Aviation Fuel (SAF) partnership using NZ’s forest residues + India’s CBG plants
- Digital Rupee Integration: Enable carbon offset purchases via CBDC during ticket booking.
- Air India-New Zealand codeshare could reduce per-passenger emissions by 18% through optimized routing (IATA 2025 projection).
- Align with ISA’s SolarX Initiative to power airport ecosystems in Pacific Islands, countering China’s fossil-heavy BRI projects.
- Develop “Carbon-Neutral Air Connectivity” by 2028 through:
Minilateral Governance Architecture
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- Create “Indo-Pacific Food Security Grid” combining:
- India’s PMFME Scheme (formalizing 200K agro-enterprises)
- NZ’s Dairy Tomorrow 2030 strategy
- ASEAN’s APTERR rice reserve mechanism
- Jointly develop “Blue Carbon Registry” under IPOI to monetize mangrove conservation (potential $2.4B/year for Pacific Islands).
- Create “Indo-Pacific Food Security Grid” combining:
THE CONCLUSION:
The India-NZ partnership must evolve from transactional ‘island-to-island’ cooperation to architecting norms for post-Westphalian globalization – where climate security, digital sovereignty, and deterrence against non-traditional threats become the new pillars of Indo-Pacific stability.
UPSC PAST YEAR QUESTION:
Q. The newly tri-nation partnership AUKUS is aimed at countering China’s ambitions in the Indo-Pacific region. Is it going to supersede the existing partnerships in the region? Discuss the strength and impact of AUKUS in the present scenario. 2021
MAINS PRACTICE QUESTION:
Q. India and New Zealand, despite their divergent geopolitical postures, have identified strategic complementarities in the Indo-Pacific. Elucidate the opportunities and challenges in deepening this bilateral partnership.
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