India and New Zealand have formalized an agreement to strengthen defense cooperation with a focus on ensuring an open and stable Indo-Pacific region. The announcement came during New Zealand Prime Minister Christopher Luxon's meeting with Indian Prime Minister Narendra Modi in New Delhi on Monday, according to our sources.

The two nations launched formal negotiations on a free trade agreement and a pact for mobility of professionals and skilled workers. They also revealed plans to boost two-way trade beyond its current level of $1.8 billion through cooperation in digital payments and arrangements for easier movement of goods.

"We have decided to strengthen and institutionalize our defense and security partnership. Along with joint exercises, training and port visits, a roadmap will be made for cooperation in the defense industry," Modi said at a joint press conference. He noted that both countries' navies are working together in Combined Task Force-150 for maritime security in the Indian Ocean.

During the talks, Modi raised concerns about activities of pro-Khalistan elements in New Zealand. These groups have organized anti-India protests and targeted Indian diplomats on a smaller scale than similar activities in Canada, the UK, and the US.

The defense memorandum of understanding was described by Indian officials as a large omnibus pact that will establish regular engagements such as joint training and ship visits. The countries already have an agreement for exchanging information on white shipping.

The trade initiatives include:

• Negotiations for a free trade agreement, which they hope to conclude by year-end
• An arrangement for mobility of professionals that will address irregular migration
• Cooperation in digital payments
• An "Authorized Economic Operators Mutual Recognition Arrangement" for easier movement of goods

Additional agreements were signed in horticulture, forestry, education, and sports. With tourism growing between the nations, they agreed to encourage carriers to begin direct flights. The leaders also expressed support for peace in the Middle East and Ukraine, while condemning terrorism "in all its forms and manifestations."

The defense cooperation comes amid rising geopolitical tensions, as President Trump recently threatened 100% tariffs on BRICS nations, including India. Modi's government has been pursuing a balanced approach to de-dollarization efforts, with External Affairs Minister S Jaishankar clarifying in October 2024 that India seeks practical workarounds for trade rather than moving away from the dollar with "malicious intent."