Hopes for India deal boosted

Prime Minister John Key is hopeful of progress towards a free-trade deal with India.

The vast, developing country, which has a middle class of about 450 million people, has always been off limits to trade deals with developed countries.

However, Key said the election of a new prime minister had changed things.

Key had his first meeting with new Indian Prime Minister Manmohan Singh yesterday, and emerged positive about the chances of negotiations.

Officials have been working on preliminary talks with India, but progress has been slow.

"He made it quite clear he's been personally looking at the trade position with New Zealand and is pleased with the progress being made," Key said.

"It's historically a big ask, but it's clear that post the election win there's some real momentum there. The size of the challenge is not to be underestimated, but it is very important; and I made it clear to him that our major focus is on the Asian region, and India is a critical part of that. There has been a substantial change in attitude since the election."

Agriculture remains a major stumbling block, with India still having a vast, protected agriculture sector.

However, Key said if New Zealand could manage to sign a deal with China, there was no reason why it could not conclude an agreement with India.

Key said he had invited Singh on an official visit to New Zealand, and had been invited to India.

"Id like to go. If you look at the countries with tremendous upsides for New Zealand one is China and the other is India."

Earlier, Key met Australian Prime Minister Kevin Rudd. The pair had discussed "a couple of initiatives".