South Asia Trade Potential

( A new Asia New Zealand Foundation report says the potential for trade between New Zealand and South Asia is ‘enormous’ if projections of economic growth in the region are accurate.

The latest in our flagship Outlook reports series, launched in April 2010, says the potential for trade between New Zealand and South Asia is ‘enormous’ if projections of economic growth in the region are accurate.

With a key country in South Asia like India projected to become one of the world’s three largest economies by 2050, even now the scale of South Asian markets is immense compared with those in New Zealand and breaking in effectively is often cited as an impediment to achieving traction.

While New Zealand has so far failed to take advantage of developing trade potential in South Asia, a possible free trade agreement with India will certainly stimulate an increasing flow of people, services and commodities between the two.

The New Zealand and South Asia Diasporas report points out that as yet, no South Asian country features in the top 25 trading partners of New Zealand. The term South Asia refers to the group of countries that encompasses India, Nepal, Bhutan, Bangladesh, Sri Lanka, Pakistan and Afghanistan.

The report says while the New Zealand-India relationship is a fairly modest one in terms of trade, a main characteristic of the relationship is in the long term migration flows to New Zealand.

“This is not to say that the trade component is insignificant, but it does tend to suggest that if this region is one of the fastest-growing economic forces, the potential for future development is enormous,” the report said. “A fundamental aspect of Free Trade Agreements is reciprocity and exchange of both commodities and people.”

The report says growing links such as a free trade agreement with India would most certainly unlock some of the future commercial potential that is as yet untapped by existing people to people links.

As it stands, New Zealand companies have had some success in niche markets such as ice cream and other dairy products as globalised consumer culture takes hold in a rapidly developing country like India.

Meanwhile the filming of Bollywood films here and the growing number of Indian students coming to study represent an inbound gain for NZ.

The report’s author Robert Didham says trade with India and the travel of people from India to New Zealand represent the two main areas of current activity between New Zealand and South Asia.

India is currently the second-ranked source of permanent and long-term arrivals to New Zealand behind the United Kingdom and ahead of China and the Philippines. India is also in the top ten source countries for visitors to New Zealand and an important destination for New Zealanders travelling overseas.

In 2008, there were 22,000 short term visitors from India and 6000 Indian students enrolled in New Zealand education institutions.

Of the over 120,000 people of South Asian ethnicity living in New Zealand, according to the 2006 Census, over half describe themselves as Indian in ethnicity.

“Increasing flows in both directions greatly increase awareness and contact. It is expected that this trend will develop as trade, multinational business activities and connections between new migrants to New Zealand and their families in the subcontinent develop.

While there are significant communities of people of Pakistani, Sri Lankan and Bangladeshi origin, the Indian population of New Zealand is by far the largest of the South Asian communities. Also significant is the growing proportion of New Zealand-born people of South Asian descent.

The study also looks at the relatively small number of New Zealanders based across South Asia. New Zealanders based in South Asia tend to be involved in religious institutions, missionary work, and military involvement with short term travel associated with adventure tourism.

Download a copy of the report (PDF)

Media Release 20 April 2010 from Asia New Zealand Foundation.
Contact: Dr Andrew Butcher, Director, Policy and Research