MCQs — India–New Zealand FTA (2025)

 

Q1. With reference to the India–New Zealand Free Trade Agreement, consider the following statements:

1. The FTA places greater emphasis on services and labour mobility rather than only tariff concessions in goods.

2. New Zealand has agreed to eliminate duties on 100% of its tariff lines for Indian exports.

3. India has offered full tariff elimination on dairy, sugar and edible oils.

How many of the above statements are correct?

a) Only one

b) Only two

c) All three

d) None

Correct Answer: b) Only two

Explanation:

✔ Statement 1 — Correct

The FTA is services-led with strong mobility & skills provisions.

✔ Statement 2 — Correct

New Zealand grants duty-free access on 100% tariff lines.

❌ Statement 3 — Incorrect

India did not give concessions in sensitive agriculture sectors:

• dairy

• sugar

• spices

• edible oils

These were protected to safeguard farmer livelihoods.

Hence, two statements are correct.

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Q2. Which of the following sectors in India are expected to benefit the most from the India–New Zealand FTA?

1. Textiles and apparel

2. Leather and engineering goods

3. Pharmaceuticals and healthcare services

4. Dairy and sugar processing

Select the correct answer using the code below:

a) 1, 2 and 3 only

b) 1 and 4 only

c) 2 and 3 only

d) 1, 2, 3 and 4

Correct Answer: a) 1, 2 and 3 only

Explanation:

Likely gainers include:

✔ textiles & apparel

✔ leather & engineering goods

✔ pharma, health & traditional medicine services

Dairy and sugar remain protected, not liberalised.

So Statement 4 ❌

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Q3. The India–New Zealand FTA includes provisions for duty-free imports of selected intermediate inputs such as wooden logs, coking coal and metal scrap. The primary objective of this provision is to:

a) Protect domestic raw material producers

b) Reduce manufacturing costs and improve value-chain competitiveness

c) Discourage import dependence

d) Promote import-substitution in core industries

Correct Answer: b)

Explanation:

Duty-free intermediate inputs aim to:

• lower production costs

• enhance export competitiveness

• strengthen value-chain participation

They are not protectionist measures, hence (a), (c), (d) ❌

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Q4. Which of the following features distinguish the India–New Zealand FTA from many earlier Indian FTAs?

1. Strong focus on skilled mobility and post-study work opportunities

2. Inclusion of an annex on health and traditional medicine services

3. Complete tariff liberalisation in agriculture across all sectors

a) 1 and 2 only

b) 1 only

c) 2 and 3 only

d) 1, 2 and 3

Correct Answer: a) 1 and 2 only

Explanation:

✔ Statement 1 — Correct

Mobility for professionals & students is a key feature.

✔ Statement 2 — Correct

Traditional medicine & health services annex strengthens pharma & AYUSH exports.

❌ Statement 3 — Incorrect

Sensitive agriculture sectors remained protected.

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Q5. India historically exhibits low FTA utilisation compared to developed economies. Which of the following are major reasons for such under-utilisation?

1. Low awareness among exporters and MSMEs

2. Complex compliance and documentation requirements

3. Non-tariff barriers in partner countries

4. Lack of value-chain integration and service-sector participation

Select the correct answer:

a) 1 and 2 only

b) 1, 2 and 3 only

c) 2, 3 and 4 only

d) 1, 2, 3 and 4

Correct Answer: d) 1, 2, 3 and 4

Explanation:

All four are genuine constraints:

• awareness gaps ✔

• procedural compliance hurdles ✔

• NTBs (standards, SPS, certifications) ✔

• weak value-chain integration ✔

The India–NZ FTA includes provisions to reduce these frictions.

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Q6. Assertion–Reason Type

Assertion (A):

The India–New Zealand FTA is expected to strengthen India’s credibility as a stable and reliable trade partner.

Reason (R):

It reflects a shift towards balanced, high-quality agreements that protect domestic interests while promoting openness.

a) Both A and R are true and R is the correct explanation of A

b) Both A and R are true but R is not the correct explanation

c) A is true but R is false

d) A is false but R is true

Correct Answer: a)

Explanation:

• The FTA combines openness + safeguards ✔

• It improves India’s perception among developed economies ✔

R correctly explains A.

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Q7. With reference to India’s trade diplomacy, which of the following statements is correct?

a) The India–New Zealand FTA is India’s first agreement with any RCEP member country.

b) With this agreement, India now has FTAs with all RCEP members except China.

c) India joined RCEP after revising tariff commitments through bilateral FTAs.

d) The agreement reduces India’s services export orientation.

Correct Answer: b)

Explanation:

✔ India now has FTAs with all RCEP members except China

❌ India has not joined RCEP

✔ The agreement strengthens services orientation, not weakens it

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🧠 Key Takeaways for UPSC Answers

Themes to highlight:

• services-led FTA model

• labour mobility architecture

• calibrated protection in agriculture

• value-chain integration

• FTA utilisation challenges

• trust-based trade partnerships

Highly relevant for:

• GS-2 (IR & Trade)

• GS-3 (Indian Economy)

• Essay & Prelims