New Zealand has taken a significant step in its international trade relations with the signing of a Free Trade Agreement (FTA) with India on 27 April 2026. Although the agreement is yet to be ratified, it is expected to come into force within a year and represents one of Aotearoa New Zealand’s most important recent trade developments.
Under the FTA, India has agreed to reduce or eliminate tariffs on 95% of New Zealand exports, opening considerable opportunities for strengthening trade between the two countries. While most commentary has focused on New Zealand’s export gains, the FTA will also increase access to skilled labour and imports from India:
- increase access to skilled labour and imports from India
- create 5,000 new visas for skilled Indian workers
- increase Indian imports into New Zealand by around NZ$249 million annually by 2027, growing to NZ$496 million by 2036 and NZ$900 million by 2050.
These changes are particularly relevant for the construction sector. Project managers, engineers, and contractors should consider how they may affect supply chains and project delivery.
Skilled Indian professionals for local projects
New Zealand’s construction industry faces significant labour shortages across a range of skilled occupations with forecasts indicating the shortfall could increase by approximately 38% by 2028. These shortages have been driven by factors such as skilled workers moving overseas, an ageing workforce and restrictive immigration settings. The shortage of skilled employees has placed considerable pressure on the construction sector, contributing to project delays and rising labour costs.
An immediate benefit of the FTA will be a new Temporary Employment Entry (TEE) visa pathway for Indian professionals aimed at alleviating some of New Zealand’s ongoing workforce pressures in specialised roles that have proven difficult to fill domestically.
The TEE pathway offers employers access to a broader pool of high-quality candidates. It will allow up to 1,667 visas annually over an initial three-year period, with a cap of 5,000 visa holders at any given time. It targets highly skilled occupations on Immigration New Zealand’s Green List of in-demand roles, including engineers, project managers, quantity surveyors, surveyors, and site foremen.
Lower costs for construction materials
The FTA also will influence access to construction materials, granting eligible Indian goods duty-free access to the New Zealand domestic market. While New Zealand’s tariffs are already relatively low, some industrial and manufactured goods, including construction materials, currently attract tariffs of around 5 -10%. Removing these is intended to reduce the cost of commonly used materials such as steel, iron, glass and electronic equipment.
Over time, the FTA is expected to work in tandem with the Government regarding overseas building products, increasing competition among domestic and international suppliers, and giving contractors and developers a wider range of sourcing options, particularly where Indian products offer cost advantages.
Industrial goods are expected to drive most of the increase in imports from India, with projections of approximately NZ$227 million annually in 2027, NZ$432 million in 2036 and NZ$801 million by 2050. Indian suppliers are likely to become a significant and growing part of the New Zealand supply chain.
However, lower tariffs will not automatically result in reduced project costs. The extent to which savings are passed on will depend on pricing decisions made by importers, wholesalers, and retailers.
Tariff reductions will only apply to goods that meet the FTA’s Rules of Origin requirements. In practice, this means only materials ‘wholly obtained or produced’ in India will qualify. Contractors and procurement teams will need to verify product origin to ensure cost savings are realised.
In practical terms, the FTA is likely to encourage local suppliers to more actively consider Indian products that meet New Zealand building standards. This will have the greatest impact on large or cost-sensitive projects, but over time should translate to improved competition across the building products market.
While some effects will take time to materialise, the FTA is expected to influence both input costs and labour availability. Businesses that factor these changes into procurement and workforce planning early are likely to be better positioned as the agreement takes effect.
This article is provided by authors at Dentons Kensington Swan. The authors are members of the Dentons Major Projects and Construction team. The views expressed in this article are those of these authors and do not necessarily reflect the views of BRANZ.