India and Canada Forge Stronger Economic Alliance
India has signaled a significant revival in its economic partnership with Canada, with both nations identifying substantial opportunities in critical minerals, clean energy, and emerging technologies. This renewed engagement comes as the two democracies work to diversify global supply chains and establish secure technology ecosystems for the future.
Addressing the Indo-Canadian Business Chamber in New Delhi, Trade Minister Piyush Goyal emphasized India's growing capabilities in artificial intelligence, quantum computing, machine learning, and next-generation data centers. He highlighted that India's massive pool of STEM graduates positions the country as an ideal strategic partner for Canada in these cutting-edge fields.
Diplomatic Thaw and Trade Revival
The renewed economic engagement follows a period of diplomatic strain that began in 2023 after Canadian Prime Minister Justin Trudeau alleged Indian involvement in the killing of a Khalistani separatist. India firmly rejected these allegations, leading to expelled diplomats, suspended visa services, and frozen trade talks between the two nations.
However, the diplomatic ice began melting when Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney met on June 18 during the G7 Summit in Kananaskis. Both leaders agreed to revive negotiations, setting the stage for renewed cooperation.
Since that pivotal meeting, several high-level Canadian ministerial visits have taken place, including Foreign Affairs Minister Anita Anand's visit from October 12-14 and Trade Minister Maninder Sidhu's November 12-14 visit. These diplomatic missions have been crucial in rebuilding trust and restoring momentum in bilateral relations.
Ambitious Economic Targets
Both governments are now working to fast-track a high-ambition Comprehensive Economic Partnership Agreement (CEPA) with the shared goal of doubling bilateral trade by 2030. This ambitious target comes despite recent trade figures showing India with a slight deficit - exports to Canada stood at $4.22 billion while imports reached $4.44 billion in FY25.
Minister Goyal stressed that India and Canada remain natural allies, anchored in shared democratic values and mutual trust. He pointed to India's expanding national power grid, which now reaches 500 GW capacity including 250 GW of clean energy, as a key enabler for AI-driven infrastructure development.
The minister further revealed that India aims to double its clean energy capacity to 500 GW by 2030, positioning the country among the few democracies capable of offering round-the-clock clean energy at competitive global rates.
Industry Experts Welcome Renewed Engagement
Trade experts and industry leaders have welcomed the resumed diplomatic engagement, expressing optimism about the potential benefits for both economies. Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), described the resumption of FTA talks as "a highly positive signal for exporters."
"Faster market access and lower tariffs can unlock real opportunities for Indian sectors like textiles, engineering goods, pharma and agri-products," Sahai explained. He emphasized that a balanced, modern FTA could significantly deepen supply chains, boost competitiveness, and provide Indian export growth with a strong strategic advantage.
Rajnish Gupta, Partner at EY India's Tax and Economic Policy Group, highlighted the particular potential in critical minerals, noting that Canada is the world's leading producer of potash and ranks among the top producers of several critical minerals including lithium, cobalt, and graphite.
"Canada also hosts the world's leading mining finance ecosystem in Toronto," Gupta added. "This partnership can help develop secure diversified supply chains for energy transition in India."
Strengthening Financial and Commercial Ties
Minister Goyal also noted the strengthening financial links between the two nations, pointing to continued interest from Canadian pension funds and the growing presence of Canadian companies in Indian infrastructure, renewables, and technology sectors.
The trade relationship between India and Canada remains robust despite previous diplomatic challenges. India primarily imports critical minerals, nuclear and clean-energy equipment, aerospace parts, and agricultural products including lentils from Canada. Meanwhile, Indian exports to Canada include textiles, auto components, pharmaceuticals, IT services, and food-processing goods including dairy products.
The renewed engagement represents a significant step forward in bilateral relations, with both nations recognizing the strategic importance of their partnership in an increasingly complex global economic landscape. As trade experts indicate, the successful implementation of CEPA could transform the economic relationship between the two democracies, creating new opportunities for businesses and strengthening supply chain resilience.
