Prime Minister John Key thinks anti-immigration attitudes by existing political parties are one of the reasons an Indian political party has been formed.
"We've certainly heard a slightly more vocal voice from some mainstream political parties, including Labour, being quite anti-migrant in the last year or so," Mr Key said on Tuesday.
"It's not just Winston Peters... so you're always going to see some people wanting to make sure their voice is heard the other way."
The new party, called the New Zealand People's Party, has been formed by Indians in Auckland.
Its founders say it will have a strong law and order focus, and also call for streamlined processes for immigrants, students and refugees who come to New Zealand.
The party intends putting up a candidate in the Mt Roskill by-election, which will be held if Phil Goff wins the Auckland mayoralty, and contesting seats in next year's general election.
Mr Peters says New Zealand can't afford to get caught up in race-based politics.
"No country is going to progress if we have political parties spending time accentuating their differences," he said.