Labour and Greens in the Hot Seat Over India Free Trade Deal

What was meant to be a major political win for the Prime Minister has quickly turned into a delicate political standoff.

The India–New Zealand free trade agreement, announced just months into Christopher Luxon’s first term, now sits at the centre of a growing dispute involving coalition partners, opposition parties, and the next election cycle.

At the heart of the tension is NZ First leader Winston Peters, whose outspoken opposition has complicated what National hoped would be a clear achievement. His stance has placed added pressure on Labour and the Greens, who now hold the balance of power needed to pass the legislation required to bring the deal into force.

A Promise That Came With Risk

Luxon committed to securing an India free trade deal during a televised leaders’ debate, under heavy public pressure. At the time, critics called the promise ambitious at best.

Previous governments struggled to move negotiations forward. John Key’s National government failed to reach an agreement, while Labour never progressed to formal talks during its last term.

Against that backdrop, delivering a deal in just nine months can be seen as impressive. Others argue it raises questions about whether the government prioritised speed over substance.

Economic Gains, But Dairy Falls Short

Industry groups and economic analysts have welcomed the agreement, calling it a step forward for exporters across multiple sectors. Infometrics described the deal as broadly positive, particularly for goods outside the dairy sector.

Dairy, however, remained the key prize. On that front, gains appear limited.

Exporters have already expressed disappointment, and Labour trade spokesperson Damien O’Connor has publicly highlighted dairy access as a major concern. He has warned that complex trade agreements cannot be rushed without consequences.

Winston Peters Draws a Clear Line

Peters moved quickly to distance NZ First from the agreement. He released a critical statement moments before the Prime Minister’s media conference began.

He described the deal as a poor trade-off, arguing that the economic benefits fail to justify concessions made to India. These include provisions for three-year work visas and expanded working holiday schemes.

With an election approaching, Peters has little incentive to soften his position. Differentiating NZ First from National allows him to appeal to voters uneasy about immigration and trade liberalisation.

Opposition Holds the Cards

With NZ First opposed, National must look elsewhere for support.

Labour appears open but cautious. O’Connor has described the deal as a “very small step” and confirmed Labour will make a final decision in the new year. That timeline gives the party room to negotiate political concessions.

The Greens have raised different concerns. Trade spokesperson Lawrence Xu-Nan has called for full public release of the agreement text before taking a position. He has also questioned whether non-tariff barriers affecting exports like timber have been adequately addressed.

So far, the Greens say neither the minister nor officials have engaged with them in detail.

Te Pāti Māori has already ruled out support. Co-leader Rawiri Waititi cited weak Treaty of Waitangi protections and a lack of consultation with Māori. He also echoed criticism of the deal’s dairy and immigration settings.

What Happens Next

Legislation will be required to activate the agreement. That reality gives opposition parties real leverage.

Labour and the Greens must now weigh two risks. Supporting the deal could help the economy and preserve New Zealand’s international reputation. Blocking it could open them to accusations of political sabotage from National and ACT.

National appears to be betting that pragmatism will outweigh politics.

Whether that gamble pays off will shape not only the fate of the India free trade agreement, but also the tone of trade and immigration debates heading into 2026.