India and New Zealand on Monday signed a free-trade agreement to deepen economic ties and expand market access, as both countries navigate mounting global trade disruptions.

The deal comes as New Delhi moves to diversify export markets to offset the impact of steep tariffs imposed by the United States and instability in shipping and energy routes due to the Iran war. For New Zealand, the agreement is part of a broader push to reduce reliance on China, its largest trading partner.

The agreement...