India's three new trade deals: what do New Zealand, the UK and the EU really change?
Commerce Minister Piyush Goyal has three big trade deals in the news: New Zealand started on 20 October, the UK in July, and the EU is still being signed. With all three, India already sells more goods than it buys, which is rare. You'll also learn what a trade deficit is.
- New Zealand: in force since 20 October 2026. Every Indian product now enters at zero import duty 2. The bigger change is for people: student work hours and a 3-year post-study work visa 2.
- UK: in force since 15 July 2026. 99% of Indian product types enter at zero duty, and Indians on UK work assignments skip UK social security for up to 5 years 6,7.
- EU: agreed on 27 January 2026 but not signed yet. Piyush Goyal says signing by December and a start in early 2027 12.
- The surprise: India already sells more goods than it buys with all three 3,8,9. Learn: trade deficit.
The Commerce Ministry counts nine trade deals covering 38 countries since 2021 1. This page looks at the three that matter most right now, and at where each one stands today: announced, agreed, signed or in force.
New Zealand: the goods change is small, the people change is big
From 20 October, all Indian goods enter New Zealand at zero duty 2. But more than half of India's exports there already paid zero standard duty before the deal 3. So the larger change is in services and mobility (people moving to study or work), as the trade think tank GTRI also says 2.
- Indian students can work 20 hours a week while studying 2.
- Science and tech (STEM) graduates get a 3-year post-study work visa; PhD holders get 4 years 2.
- A new visa lets up to 5,000 skilled Indians work there at any one time, for up to 3 years 4.
- India kept dairy, sugar and edible oils out of the deal 5.
UK: in force for three months
The UK deal started on 15 July 2026. It gives zero duty on about 99% of India's tariff lines, including clothes, leather, shrimp and engineering goods 6. A separate social security agreement means Indians sent to the UK on temporary work don't pay into the UK system for up to 5 years. UNI reports it should help more than 75,000 professionals 7.
EU: the biggest one, still being signed
The EU is India's biggest partner for goods trade 18. The EU will give immediate zero duty to Indian textiles, clothes, leather, footwear, gems and jewellery 10. In return, India will cut its tax on European cars to 40%, from as high as 110%, as Reuters reported 11. Nothing changes yet: the deal still has to be signed and approved.
| Flow | US$ bn |
|---|---|
| India sold to the EU | $75.85 bn |
| India bought from the EU | $60.68 bn |
Source: Commerce Ministry, via Business Today 9
- 1India's exports to the EU
75.85$75.85 bn - 2India's imports from the EU
60.68$60.68 bn - 3Exports minus imports
75.85 − 60.68$15.17 bn
A trade surplus of about $15 billion for India with the EU (our maths).
Source: Business Today 9
The twist: India sells more than it buys, with all three
| Partner | Year | India sells | India buys | Result |
|---|---|---|---|---|
| New Zealand | 2025 | more | less | small surplus |
| UK | 2025-26 | $13.44 bn | $11.68 bn | surplus $1.76 bn |
| EU | 2024-25 | $75.85 bn | $60.68 bn | surplus ≈ $15.2 bn |
That is unusual. NITI Aayog's Trade Watch found that in April–June 2025, imports from all of India's trade-deal partners rose 10% while exports fell 9%, and the gap grew 59% from a year earlier 13. Studies of India's older deals (with ASEAN, Japan and South Korea) found the trade gap with those partners grew much faster than with the rest of the world 17.
What the numbers tell us
- CompareThe new deals are with partners where India already sells more
UK and EU goods trade both show an Indian surplus 8,9, and India also earns more than it pays in services trade with the EU (about €9 billion in 2025) 15. That is the opposite of India's position with most older partners 13.
- Who it hitsNew Zealand's real gain is for people, not goods
More than half of Indian goods were already duty-free there 3. The new parts are student work hours, longer post-study visas and 5,000 skilled work visas 2,4.
- The catchA deal only helps if exporters use it
Zero duty applies only when goods meet each deal's rules of origin. For EU clothes, that means two processing steps and 40% of the value added locally 14. NITI Aayog has flagged low use of trade deals as a long-standing problem 13.
Why it matters
- For exporters: check each deal's rules of origin before you ship, or you pay the normal duty 14.
- For students: New Zealand's new work rules started on 20 October 2; read them before you apply.
- For professionals on UK assignments: no double social security payments for up to 5 years 7.
Learn something: Trade deficit and Rules of origin
When a country buys more from another country than it sells to it, it has a trade deficit with that country. When it sells more than it buys, it has a trade surplus.
Trade balance = exports − imports (below zero = deficit, above zero = surplus)With the EU in 2024-25, India sold $75.85 bn and bought $60.68 bn, so it had a surplus of about $15 bn 9. With its trade-deal partners as a group, India had a deficit: it bought more than it sold 13.
Why it matters: It shows who is selling more to whom. A growing deficit can mean imports are rising faster than exports.
Common mistake: Thinking a deficit is always bad: buying cheap raw materials or oil can create a deficit and still help industry.
Try it: With the UK in 2025-26, India sold $13.44 bn and bought $11.68 bn. Surplus or deficit, and how much?
A surplus of $1.76 bn (13.44 − 11.68).
The rules in a trade deal that decide whether a product counts as made in a country, and so gets the deal's lower duty.
Usually: enough of the product's value (or its main processing) must come from the deal countryUnder the EU deal, Indian clothes get zero duty only if they go through two processing steps in India and 40% of their value is added locally 14.
Why it matters: Without them, goods made elsewhere could be routed through one country just to dodge duty.
Common mistake: Assuming every product from a deal country gets zero duty automatically; exporters must prove origin.
Send them this: what changed with New Zealand, the UK and the EU, and the rules to check first.
Words in this story
- trade deal
- An agreement between countries to cut taxes (duties) on each other's goods and make trade in services easier. Also called an FTA (free trade agreement).
- import duty
- A tax a country charges on goods coming in from another country.
- tariff lines
- The list of product types in a country's customs rulebook. '99% of tariff lines' means 99% of product types.
- in force
- When a signed deal actually starts applying.
- post-study work visa
- Permission to stay and work in a country for a time after finishing a course there.
Sources
- Open Magazine / ANI, India Has Signed 9 Trade Pacts in 4 Years and Is Negotiating More: Piyush Goyal, 11 Oct 2026
- ANI, India-New Zealand FTA comes into force; leaders welcome expanded trade and investment opportunities, 20 Oct 2026
- ThePrint, India-New Zealand FTA: Over 50% of Indian exports already faced zero standard tariffs before deal, 23 Oct 2026
- Deccan Herald / PTI, Explained: India's free trade agreements and partners, Dec 2025
- Oneindia, India-New Zealand FTA Explained: What It Means For Exports, Jobs And Students, Oct 2026
- DD India, India-UK CETA, Social Security Pact to take effect from July 15, Jun 2026
- UNI, India-UK CETA comes into force: Winners across Textiles, Pharma, Auto and IT, 15 Jul 2026
- PIB, India–UK CETA Comes into Effect (factsheet), 15 Jul 2026
- Business Today, India-EU FTA: Textiles, leather, labour-intensive exports boost for India, 27 Jan 2026
- World Economic Forum, Here's why the India-EU trade pact is the 'mother of all deals', Feb 2026
- Trading Economics (Reuters report), India to Slash Car Tariffs to 40% in EU Trade Pact, 26 Jan 2026
- Business Standard, India-EU FTA may come into effect in January-March, says Piyush Goyal, 22 Oct 2026
- Outlook Business, FTA Utilisation Remains Weak as India Buys More Than It Sells to Trade Pact Partners (NITI Aayog Trade Watch), 2025
- RICE IAS, What is the India-EU Free Trade Agreement?, Sep 2026
- EEAS (European Union), The European Union and India, 2026
- Business Standard, Datanomics: India-New Zealand deal begins under historical deficit shadow, 19 Oct 2026
- Drishti IAS, India's Free Trade Agreement Paradox, 12 Jun 2026
- India Briefing, India-EU Trade Deal Set for January 27 Signing in New Delhi: Report, Jan 2026
How we did this. Every number links to its source. Where sources disagree, we leave the number out and say so. When we work out a number ourselves, we say "our maths".