India-Canada trade: The repair of India-Canada relations has moved faster than expected. Finance Minister Nirmala Sitharaman’s visit to Toronto last week produced the first India-Canada Economic and Financial Dialogue. The two governments have also repeated their goal of taking bilateral trade to C$70 billion, about $50 billion, by 2030. Negotiations on a Comprehensive Economic Partnership Agreement are proceeding in parallel, with an agreement targeted by the end of 2026.
That target is demanding given the present size of the relationship. It nevertheless captures the change in official intent since ties reached their lowest point in decades. A trade agreement could give economic relations greater depth, though its value will ultimately depend on whether commercial engagement can continue during periods of political tension.
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The breakdown began in September 2023, when then Canadian Prime Minister Justin Trudeau said his government was investigating a possible connection between agents of the Indian government and the killing of Sikh separatist Hardeep Singh Nijjar in British Columbia. India rejected the allegation. Relations deteriorated thereafter, with reciprocal diplomatic expulsions, reduced representation and the disruption of several official contacts.
The change under Prime Minister Mark Carney has been marked. His visit to India in March was the first bilateral visit by a Canadian prime minister since 2018. The two governments restarted trade negotiations, reached agreements on critical minerals and uranium, and restored several channels of official engagement. Three rounds of CEPA negotiations have since been completed.
India-Canada trade starts from a modest base
The economic case for this repair is easier to establish than the political one. Canada wants additional markets at a time when dependence on the United States has become a greater source of risk. India is looking for export opportunities, investment and more secure supplies of energy and minerals. These interests will not settle the disputes that damaged the relationship in 2023. They do provide both governments with a reason to stop those disputes from consuming the rest of the relationship.
Canadian data put two-way merchandise trade with India at C$13.6 billion in 2025, consisting of C$3.9 billion of Canadian exports and C$9.7 billion of imports. Services trade is larger than is sometimes recognised. Canada exported C$15.2 billion worth of services to India in 2025, much of it linked to spending by Indian students.
The C$70 billion target therefore assumes a significant acceleration over the rest of the decade. Lower tariffs can contribute to that expansion, although the eventual gains from CEPA will depend heavily on the rules that govern services, investment and market access.
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The economic case for closer relations rests on a fairly straightforward complementarity. Canada is an important producer of uranium, potash, pulses and several minerals required by modern industry. India offers a much larger market as well as demand arising from its expansion in manufacturing, energy and infrastructure. Canadian companies also have access to pools of long-term capital that could find opportunities in India.
The international setting has strengthened the incentive on both sides. Canada is trying to reduce the risks created by its heavy dependence on the United States, especially after renewed trade tensions with Washington. India has spent the past few years widening its network of commercial agreements as it searches for export markets and new sources of investment.
Neither country will dramatically alter its economic geography. The United States will remain overwhelmingly important to Canada, while India’s largest commercial relationships will continue to extend across several regions. The case for India-Canada trade is therefore one of diversification rather than substitution.
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Minerals and energy could anchor the relationship
Critical minerals provide perhaps the clearest example of overlapping interests. India is seeking more secure access to the minerals used in batteries, electronics and clean-energy equipment. Canada has substantial reserves and wants more investment in mining and processing as well as additional markets for its output.
The agreement reached during Carney’s visit covers cooperation in exploration, mining and processing, along with investment. Much will depend on whether this official framework leads to actual projects involving Indian companies and Canadian suppliers. Mineral diplomacy has become common across the world; producing viable supply chains is considerably more difficult.
Nuclear energy has moved further. Cameco and India’s Department of Atomic Energy have signed a C$2.6 billion agreement under which nearly 22 million pounds of uranium are to be supplied between 2027 and 2035. This fits with India’s plans to increase nuclear generation while diversifying the sources of its fuel.
Agriculture has comparable commercial potential but presents harder negotiating problems. Canada exported about C$1.4 billion of agri-food and seafood products to India in 2024, with peas and lentils accounting for much of the trade. India is already an important destination for Canadian pulses.
Market access will remain contentious. Indian agricultural policy seeks to protect farm incomes while also managing food prices, which makes governments cautious about large increases in imports. Canadian producers, for their part, want predictable access to one of the world’s biggest food markets. CEPA negotiators will have to find arrangements that offer exporters greater certainty without running directly into India’s domestic farm politics.
Services could alter the trade arithmetic
The structure of services trade suggests that the bilateral relationship is already broader than the merchandise numbers indicate. Canada became a major exporter of services to India largely because of education-related travel. India has a different set of interests, especially in technology services and the movement of skilled professionals.
The past pattern cannot simply be projected forward. Canada has tightened its international student regime, and Indian student numbers have fallen from their earlier peaks. Education may remain an important part of the relationship, but it is unlikely to generate services exports at the same rate as it did during the previous decade.
That gives both governments an incentive to broaden the services relationship. Clearer arrangements for professional mobility and recognition of qualifications would help Indian workers and Canadian employers. Rules governing digital trade and services investment will become more important as firms on both sides expand across borders.
These questions are also politically sensitive. Immigration has become a contentious issue in Canada, while India attaches considerable importance to mobility provisions in its trade agreements. The outcome of the services negotiations will therefore provide a useful indication of how far each government is prepared to accommodate the other’s economic interests.
Economic ties need institutional protection
The 2023 crisis revealed a weakness that tariff negotiations cannot address. A serious security disagreement was able to disrupt much of the wider bilateral relationship.
The political differences have not disappeared. Canada continues to pursue its concerns about foreign interference and the Nijjar case, while India continues to reject allegations of state involvement. Neither government is likely to alter its position merely because commercial relations are improving.
The more feasible objective is to prevent such disputes from paralysing cooperation in unrelated areas.
There are signs that both governments have reached a similar conclusion. Trade negotiations have resumed, the finance ministers now have a formal dialogue and economic engagement is proceeding alongside discussions on security and law enforcement. Such arrangements provide officials with channels that can remain open even when political relations deteriorate.
Businesses will need more than ministerial meetings. Diplomatic missions must function normally, visa procedures need reasonable predictability and investors require credible mechanisms for resolving disputes. India and Canada are also considering a bilateral investment agreement, which could provide companies with greater certainty if the negotiations produce a workable framework.
This institutional architecture deserves more attention than the C$70 billion target. Governments have limited control over the precise value of bilateral trade four years from now. They have much greater control over whether customs authorities, regulators, diplomats and economic ministries continue dealing with one another during periods of political tension.
The durability of the current reset will become evident during the next serious disagreement between New Delhi and Ottawa. If commercial negotiations and official economic channels continue to function, the relationship will have acquired a degree of resilience that it lacked in 2023. A CEPA would then be part of a broader repair of India-Canada relations rather than an agreement vulnerable to the next diplomatic rupture.