Prime Minister Luxon Publicly Rebukes Coalition Partner Over Controversial India Trade Deal Disagreement
New Zealand Prime Minister Christopher Luxon explicitly rejected Foreign Minister Winston Peters' criticism of the new trade agreement with India on Sunday. Luxon called his coalition partner "plain wrong" regarding immigration concerns, this highlights a deepening fracture within the government as officials struggle to ratify the economic pact.
Longstanding Trade Goals Meet Internal Political Resistance
New Zealand has sought a trade deal with India for years to diversify exports beyond China. The agreement finalized in late 2025 represents a major strategic shift, it opens access to 1.4 billion consumers. However, Winston Peters has historically opposed similar deals, he previously fought against the China FTA during his long political career. Tensions over immigration and dairy protections have simmered within the coalition government for months, this latest public spat marks a significant escalation in their ideological differences. The government views India as a critical partner for economic growth, yet domestic political alliances are now straining under the weight of these policy disagreements.
Luxon Defends Economic Benefits While Peters Cites Migration Fears
The core dispute involves conflicting interpretations of the agreement's immigration clauses. Peters claims the deal allows "tens of thousands" of Indian nationals to enter New Zealand, he argues this displaces local workers and strains infrastructure. Luxon dismissed these figures as factually incorrect, he emphasized that the deal actually benefits the economy. Trade Minister Todd McClay provided specific data to counter the Foreign Minister's narrative. The agreement actually caps temporary work permits at 1,670 annually for specific sectors like chefs and yoga instructors, the total number cannot exceed 5,000 people at any one time.
Another point of contention is the dairy sector, Peters argues the deal fails to remove tariffs on key exports like milk and cheese. The Prime Minister defended the outcome as a "landmark deal" that will double bilateral trade within five years, it also secures commitments for $20 billion in investment. Despite these assurances, New Zealand First has invoked the "agree to disagree" clause, they confirmed they will vote against the enabling legislation.
Coalition Fracture Forces Government to Seek Opposition Support
This public break in unity means the National Party cannot rely on its coalition majority to pass the bill. Prime Minister Luxon must now negotiate with the opposition Labour Party to ratify the treaty, this creates a precarious legislative environment. Economically, exporters expect tariff relief and new market access, meanwhile the dairy industry faces continued barriers despite the high-level diplomatic success.
The government plans to sign the formal agreement in early 2026. Officials indicate that implementation will follow later next year, they urge lawmakers to focus on the long-term economic gains rather than political infighting.
