How India-Canada Relations Are Thawing as CEPA Talks Regain Momentum | Explained

Union Minister of Commerce and Industry Piyush Goyal held a virtual meeting with Canada’s Minister of International Trade, Maninder Sidhu, earlier this week. The meeting aimed to advance discussions on the proposed India-Canada Comprehensive Economic Partnership Agreement (CEPA). The CEPA between New Delhi and Ottawa is expected to strengthen bilateral trade and economic cooperation.

Canadian Prime Minister Mark Carney arrived in Mumbai today. Carney will then travel to New Delhi on Monday, where he will meet Prime Minister Narendra Modi.

After tumultuous friction between the two countries, New Delhi and Ottawa agreed to resume diplomatic talks with renewed interest in bilateral agreements in November. The advancement in strengthening relations came when the two leaders met on the sidelines of the G20 Summit held in South Africa.

Reviving India-Canada Relations

Relations between Canada and India soured before the gradual thaw owing to tensions over Sikh separatists in Canada. Ottawa expelled the Indian High Commissioner and other diplomats, which prompted New Delhi to take similar measures against Canadian diplomats.

The tussle between the countries also dates back to former Canadian PM Justin Trudeau’s India visit, when it was overshadowed by the invitation of Jaspal Singh Atwal — a former member of a banned Sikh separatist group. Further, India also criticised Canada in 2020 for Trudeau’s comments on the farmers’ protests, calling his remarks ‘ill-informed’ and ‘unwarranted.’

In 2023, Canada halted trade negotiations and later recalled 41 diplomats after India hinted that it would revoke diplomatic immunity for their families.

India and Carney Diplomacy

Under the leadership of Carney, Canada views India as an indispensable "bridging power" and a cornerstone of a new "middle-power doctrine" designed to hedge against the volatility of great-power rivalries. Central to Carney’s diplomacy are urges for middle-power nations to come together and build "connective tissue" in trade, energy, and technology to avoid being isolated by the protectionist or coercive shifts of superpowers like the U.S. and China.

For Carney, India is not just a market but a strategic counterweight; by integrating Canada’s resources — specifically uranium, LNG, and critical minerals — with India’s massive demand and technological scale, he seeks to recast the bilateral relationship as a "variable geometry" alliance.

How the CEPA Can Boost Bilateral Relations

Despite the political tensions, bilateral trade between the two countries crossed $8.7 billion in 2025. Modi has expressed interest in strengthening cooperation in defence and space, while Carney has described India as a reliable partner. Trade diversification has emerged as a key feature of Carney’s foreign policy.

India is seen as a central pillar of Carney’s call for reducing dependence on the US, owing to the market size India can offer, its expanding manufacturing base, and its rising global influence in supply chains.

The two leaders have set an ambitious target of raising bilateral trade to $51 billion by 2030, a sharp boost from current levels. India’s key exports to Canada are pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada ships timber, pulp and paper, and mining-related products.

“The proposed CEPA could help address structural constraints in bilateral goods trade by improving market access, reducing tariff barriers, and strengthening supply chain linkages. This, in turn, could help reduce trade volatility and support more sustained long-term growth,” an analysis by Rubix Data Sciences noted.

It also said the timing of the renewed negotiations is significant owing to mounting threats from the US on Canada as it seeks to diversify its export markets beyond traditional partners. India, too, is expanding its export destinations, with multiple FTAs already signed and the India-Israel FTA ready to start negotiations, as it pushes back against rising Chinese dependency and dominance.

Bilateral Trade Powered by Energy Security

According to reports, energy security is going to be one of the most prioritised sectors during Carney’s India visit. Reports suggest that Canada is likely to agree to supply India with uranium, liquefied natural gas, and liquefied petroleum gas, potentially opening a new chapter in bilateral energy ties. The two countries are also expected to discuss a longer-term framework for uranium and critical mineral supply chains.

Education

New Delhi and Ottawa have also expressed interest in expanding cooperation and collaboration in the education sector, artificial intelligence (AI), and digital technologies. Over 200 institutional partnerships linking universities and research centres are already in place between India and Canada. With over 319,000 Indian students, the Indian diaspora is one of the largest sources of international students in Canada.

Security Issues

The discussions between the two leaders are also expected to take up concerns related to extremist networks and national security issues, including organised crime and economic offences allegedly being operated from Canadian territory.

As India and Canada seek to move past diplomatic strains, the revival of CEPA talks signals a pragmatic shift toward economic cooperation. With trade diversification, energy security, and strategic alignment in focus, the coming months will determine whether the renewed engagement can translate into a more stable and forward-looking bilateral partnership.