by William McGimpsey

This submission focuses primarily on the immigration aspects of the India Free Trade Agreement.

The immigration provisions have arguably been the major bone of public contention surrounding the FTA, and the agreement comes in an international context where immigration, particularly in Western nations, is increasingly viewed as a source of destabilisation and a threat to social cohesion. This has led to significant and ongoing efforts to tighten immigration policies across many countries. In addition, India’s Prime Minister Modi has made no secret of his desire to use India’s diaspora populations as a tool of foreign policy influence. Indians are already New Zealand’s biggest and fastest growing immigrant group, with a population of 292,092 or 5.8% of New Zealand’s population at the 2023 Census.

The threats of demographic destabilisation and foreign influence therefore need to be taken seriously. The FTA includes provisions for temporary migration that, in the absence of any further changes to immigration policy, are likely to marginally increase the numbers of Indian temporary migrants coming to New Zealand and expand the pool of migrants eligible to apply for residence visas. This is likely to exacerbate the aforementioned risks if left unaddressed.

What follows is a discussion of the immigration pathways opened by the FTA and the policy levers New Zealand has available to manage them, the risks posed by these immigration pathways, and some recommendations for changes to existing immigration laws and policies to mitigate them. Brief comments on the trade and investment provisions of the FTA are included at the end.

The four immigration pathways in the FTA are temporary employment visas, student visas, working holiday visas, and intra-corporate transfers.

Temporary Employment Entry visas

Previously, Indians competed under standard Accredited Employer Work Visas or Green List rules with no dedicated quota. The FTA adds a Temporary Employment Entry (TEE) pathway – 5,000 visas at any one time (roughly 1,667 new three-year visas annually) – covering Green List shortage roles plus 600 “iconic Indian occupations” (yoga instructors, chefs, AYUSH practitioners).

In addition to the cap of 5000 in the country at any one time, access is restricted by the jobs on the Green List itself – New Zealand retains the power to restrict or change the jobs on the Green List in order to manage the types of people coming in on the TEE visas.

Applicants must also:

• Hold a genuine job offer from an accredited employer – NZ retains the power to limit numbers by strengthening the “genuine offer” test or making it more difficult to become an accredited employer;
• Meet qualification and wage thresholds – NZ can restrict numbers through simply raising the wage thresholds;
• Comply with employment standards – NZ can restrict numbers by mandating employers pay a certain amount over minimum wage or provide housing, transportation, etc.

Partners and children receive no automatic work or domestic-student rights – restricting the work and study rights of partners and children could be used to limit numbers coming to New Zealand under this pathway.

Student visas

Indians are already able to study in New Zealand under current rules, but pre-FTA work rights and post-study pathways were subject to policy change. The FTA’s Student Mobility Annex protects a minimum 20-hour weekly work rights from future cuts (below the current hourly entitlement), prevents New Zealand from placing a numerical cap on the number of Indian students, and allows extended post-study work visas (up to 3 years for most graduates, 4 years for doctorates).

Much has been made of the fact that student visas are “uncapped” under the FTA. However the debate here has been misleading – New Zealand never imposed country specific caps anyway, and we retain all the normal policy levers for limiting student visa numbers:

• Limiting enrolments in approved courses and providers – e.g. by capping international student enrolments per institution, limiting new provider registrations, removing lower-quality providers from the list, or requiring courses to be at higher levels.
• Requiring international students to achieve higher grades (via the genuine student test).
• Raising the proof of sufficient funds and accommodation – applicants must currently show they have NZ$20,000 per year in living costs, can cover their tuition fees, and have a return ticket. These requirements could be strengthened.
• NZ also appears to retain the ability to impose an overall cap on student visa numbers from all countries (as long as it doesn’t single out India).

Working holiday visas

The FTA introduces a dedicated quota of 1,000 visas per year for Indians aged 18–30, allowing a 12-month multiple-entry stay with work rights (up to 6 months per employer).

This pathway is subject to some limitations: Visas are valid for only 12 months, a maximum of six months’ work per employer, and no renewal option. Standard eligibility checks apply:

• Genuine holiday intent.
• Sufficient funds – currently $4200 to cover living expenses plus a return ticket, but New Zealand retains the power to increase the amount.
• Health – applicants must not pose a risk to public health or be likely to impose significant costs on NZ’s health system. New Zealand could require a full health check and make medical insurance mandatory.
• Good character – no serious criminal convictions (e.g., prison sentence of 5+ years or 12+ months in the last 10 years automatically disqualifies you). New Zealand could require applicants to provide a police certificate from India and any other country lived in for 12+ months in the last 10 years. NZ can refuse entry if false or misleading information is provided in the application.

Intra-corporate transferees (Annex 8K)

These were already possible under pre-FTA rules, but Annex 8K prevents future governments from removing or capping temporary work visas for executives, managers and specialists transferred by Indian companies with a commercial presence in New Zealand (they are permitted temporary stays of up to 3 years, with family accompaniment).

Annex 8K is constrained by narrow definitional requirements: only executives, managers, or specialists who have worked for the same Indian company for at least 12 months and possess proprietary knowledge qualify. Entry is permitted solely to support a genuine commercial presence (branch, subsidiary, or new setup) in New Zealand. Immigration officers still assess role suitability and business need, and all stays are subject to standard health and character checks.

Issues

1. Conversion of temporary work visas to residence visas

The migration provisions in the FTA have been intelligently structured to ensure they are temporary. This is a good precaution that goes some way to preventing the long-term accumulation of large numbers of Indian immigrants within New Zealand.

Risk: Despite the precautions taken in making the visas temporary, it is likely some of these temporary visas will be converted into permanent residence under existing rules – meaning that if the rules are not changed, the FTA will still likely result in an increase in permanent immigration from India.

Residence visas generally require a skilled job in New Zealand, meeting wage and skill thresholds, and sometimes also around two years of relevant in-country work experience. Many of the people granted temporary work permits under the pathways in the FTA will be able to accrue eligibility to apply for residence visas under these criteria. The same applies to those on student visas if they make use of the temporary work provisions granted to students following the completion of study – and Indians already apply for permanent residence following study at higher rates than many other groups.

Conversion of temporary work permits to permanent residence is already happening under current immigration settings (ie even without the FTA) and should be addressed anyway, but the FTA provisions potentially widen the funnel at the front end, and could allow something like 10-20% more Indian immigrants per year to apply for residence than is currently the case.

Suggested mitigation: To mitigate this risk, New Zealand should implement changes to how we grant permanent residence to make it more difficult for those on temporary work visas to qualify for permanent residence – this could be done by abolishing the permanent residence category entirely, or by tightening the criteria, for example by raising the skill level or salary level of the jobs or job offers applicants are required to have.

The rationale for the permanent residence category is shaky anyway – it has been significantly abused in many countries, leading to demographic changes that are destabilising society. And its purpose isn’t clear – these people are not full citizens, so why are they here? To fill worker shortages? If so, why shouldn’t they go home when the job is done or New Zealanders are available to fill the position? For humanitarian reasons? If so, why can they not return when conditions are safe in their home country? Several nations are now weighing elimination or overhaul of permanent residence for these reasons – Sweden, Denmark, the UK, the US, the EU, etc, and are moving towards a presumption that immigrants are in the country temporarily, and there is no automatic or presumed conversion of temporary visas into permanent residence. New Zealand should give serious consideration to this as well.

2. Accumulation of temporary workers

Risk: Even if the permanent residence issue is addressed, without additional changes, particularly to the Accredited Employer Work Visa system, the number of temporary workers in the country at any one time could snowball. The majority of temporary work visas in New Zealand are issued under AEWV, and there has been much public discussion around the low-skilled nature of many of these roles – fast food workers, uber drivers, and so on. The overstayer problem has also grown larger in recent years with reports of the total overstayer population now at 21,000. As the temporary worker population increases it is likely that the overstayer problem will increase as well. This is an area that needs to be addressed.

Proposed mitigations: The skill and wage levels required for roles able to be filled through the Accredited Employer Work Visa pathway, and other temporary work visa pathways, should be increased to ensure we are only bringing in truly highly skilled workers in occupations where there are genuine shortages. The ACT Party has recently announced a policy of expiring the roles on the AEWV each year and requiring evidence of demand for them to be reinstated. This policy may also have merit.

Risk: There is also a small risk that the uncapped intra-corporate transferee pathways could snowball over time if the scale of Indian business activity in New Zealand increases dramatically. While the number of immigrants using this pathway is likely to initially be quite low, the FTA prevents it from being capped, so there is a risk it could scale with the level of Indian investment and business activity. Indian investment in New Zealand doesn’t benefit New Zealanders if the jobs all go to transferees from India.

Proposed mitigation: Investment and business activity from India should be monitored to ensure this doesn’t become problematic, and restrictions placed on it if necessary.

Other issues

A comment on potential gains from trade

New Zealand had very low tariffs and trade barriers on Indian imports prior to the negotiation of the FTA, so in opening up our trade to India under the deal we give up very little in terms of trade protections. On the other hand, India is one of the world’s largest and fastest growing markets, and it has very large trade barriers. The access New Zealand gains for our exporters is significant:

• Wood – the biggest win. Over 95% of New Zealand’s forestry and wood product exports (a major existing trade flow to India) become duty-free immediately, with tariffs on almost all remaining trade phased out over seven years.
• Sheep meat – current tariffs of around 30-33% are eliminated immediately. This provides a big opportunity to increase our premium sheep meat exports into one of the great markets of the future.
• Wool – another significant gain. Tariffs of around 30–33% are eliminated immediately, providing a significant improvement in market access into one of the world’s largest textile manufacturing hubs.
• Horticulture – big cuts to trade barriers for kiwifruit, apples, cherries, avocados, blueberries, and persimmons.
• Seafood – Tariffs on key fish and seafood exports (currently up to 33% or higher on some lines) are phased out over seven years, delivering duty-free access for most products including mussels and salmon.
• Wine – Indian tariffs on wine (currently around 150%) are reduced by over half over 10 years.
• Manuka honey – tariffs cut by 75% over five years.
• Services – covering engineering, environmental services, education, health, audio-visual, financial services, and more.

The lack of new access for our dairy exports is the biggest disappointment in the deal. India has a large amount of small farms it wants to protect from competition, so this is understandable on their part. Even here however, we have negotiated a clause that requires more consultation if any other country gets better access for their dairy products.

On balance, the FTA is forecast to provide a boost to NZs exports and GDP, and NZ stands to gain much more than India does from improved trade access. Over 95% of our current exports to India will benefit from tariff elimination/reduction. But the real benefit is the potential upside for exporters if they are willing/able to use the improved trade access to scale up their exports to India in future, as it becomes the world’s third-biggest economy.

Investment provisions

The FTA contains an “aspirational” provision for New Zealand to promote investment into India of up to $20 billion $US. India has the ability to initiate a government-to-government consultative process if it feels sufficient progress toward the target isn’t being met, and as a final backstop remove some of the trade concessions granted to New Zealand under the deal. Presumably, in such a scenario, New Zealand would consider exiting the deal completely.

The consultative process and potential for removing trade concessions potentially gives India some leverage to try and cajole the NZ government into doing more to facilitate this investment. However, it is unclear exactly the level of risk posed to New Zealand through these measures.

Question for the Select Committee: What is the likelihood that India will use the full leverage granted to it under the agreement should New Zealand fail to live up to its investment promotion obligations? And what is New Zealand’s “gameplan” for dealing with such a scenario?

Summary of recommendations:

1. Implement changes to how New Zealand grants permanent residence to make it more difficult for those on temporary work visas to qualify for permanent residence – this should be done by either abolishing the permanent residence category entirely, or by tightening the criteria, for example by requiring applicants to have an existing job or job offer that is very highly skilled or very highly paid.
2. Increase the required skill and wage levels for roles able to be filled through the Accredited Employer Work Visa pathway, and other temporary work visa pathways, to ensure we are only bringing in truly highly skilled workers in occupations where there are genuine shortages in New Zealand.
3. Monitor investment and business activity from India to ensure the level of intra-corporate transferees does not become problematic, and place restrictions on this investment if necessary.
4. Develop a “gameplan” for how New Zealand would deal with India if it chose to fully use the leverage granted to it under the FTA to force New Zealand to promote investment toward the US$20b target.

Originally published on The Conservative Network.