Fonterra is excited about a possible free trade deal (FTA) between New Zealand and India but is wary of the time it may take to strike a deal.

Cooperative chairman Sir Henry van der Heyden says an FTA with India would offer significant opportunities for both New Zealand and Fonterra.

He says the Indian market is a huge consumer of dairy products.

“It will offer huge opportunities, no doubt at all,” he told Rural News.

However, van der Heyden cautions that FTAs take a long time to complete: “I’m sure this one will be no exception.”

Trade Minister Tim Groser says an FTA with India offers great promise for New Zealand businesses.

“India is already one of our fastest growing markets, with New Zealand exports having tripled over the last decade,” he says.

“Our negotiators will target the currently high barriers facing New Zealand exports to India so that trade can further flourish.”

At present India’s economy is highly protected. According to the Ministry of Foreign Affairs and Trade, tariffs placed on New Zealand dairy and meat exports to India range from 20 to 60%.

Keeping in line with WTO agreements, India has the ability to charge tariffs as high as 100% on baby formula and 150% on frozen sheep meat.

Groser and Indian Commerce Minister Anand Sharma announced the start of negotiations towards an FTA at a WTO Trade Ministers meeting in Davos, Switzerland.

Groser has emphasised the strategic importance to New Zealand of the growing Indian economy – forecast to grow at almost 8% this year.

“India has a population of over one billion people. By 2025, India will almost certainly be the third largest economy in the world,” he says.

The New Zealand Cabinet approved the start of negotiations in March last year and the relevant Indian Cabinet Committee recently approved the proposal – a decision delayed until now by India’s mid-year election in 2009.

“I expect negotiations to start soon and am confident we can deliver a high quality agreement with significant benefits to New Zealand exporters,” says Groser.