India will establish a high-level oversight committee to evaluate whether New Zealand should be granted a “grace period” or other remedies if it fails to meet its foreign direct investment (FDI) obligations under the recently concluded free trade agreement (FTA).
The India-New Zealand FTA, announced on December 22, includes Wellington’s commitment to invest $20 billion in India over the next 15 years. The agreement features a “rebalancing mechanism,” allowing India to suspend FTA benefits if the expected investment does not materialize. Unlike the India-EFTA trade agreement, which specifies a three-year grace period for European nations, the New Delhi-Wellington deal does not define the duration of any potential grace period.
“In case FDI commitments fail to materialize during the 15-year period, the committee will have the authority to decide an appropriate penalty or consider granting a grace period, depending on the extent of investments made or other critical factors,” said a government official. The committee will be headed by a senior commerce department official.
An Investment Desk will also be set up by the Department for Promotion of Industry and Internal Trade (DPIIT) to monitor investment flows and assist investors, the official added.
Currently, New Zealand’s cumulative FDI into India stands at approximately $88.24 million between January 2000 and September 2025, with interest largely in manufacturing and infrastructure-related sectors.
The India-New Zealand FTA is expected to be signed within the next two to three months, following completion of legal scrubbing of the text.
For context, under the India-EFTA Trade and Economic Partnership Agreement (TEPA), which came into force on October 1, India has secured binding commitments of $100 billion in investments and one million direct jobs over 15 years. The EFTA agreement allows India to partially withdraw market access if investment obligations are not met, after a consultation period and a three-year grace period.
The agreements focus on long-term FDI rather than short-term portfolio flows, aiming to boost productive capacity and job creation in India.
