India and Canada have agreed to formally resume talks on an ambitious Comprehensive Economic Partnership Agreement (CEPA), as Prime Minister Narendra Modi and his Canadian counterpart, Mark Carney, met on the sidelines of the G20 Leaders\u2019 Summit in Johannesburg on Sunday. The development underscores the continuing improvement in relations between the two countries.<\/p>\n
Following the Modi-Carney meeting, Canadian Foreign Minister Anita Anand<\/a> stated on Monday that Canada and India will act swiftly on the trade deal, marking a shift in relations following two years of strained ties, according to news agency AP.<\/p>\n Also Read | India, Canada agree to start Comprehensive Economic Partnership talks<\/a><\/p>\n Anand noted that Ottawa has a new foreign policy in response to US President Donald Trump’s trade war<\/a> and highlighted Carney’s aim to double non-US trade within ten years.<\/p>\n 1-Revival in ties improves investor confidence<\/p>\n Easing diplomatic tensions improves investor confidence. The cooling of tensions is a sign of political stability, which reduces the perceived risk for Canadian pension funds, banks, and corporations considering long-term investments in India.<\/p>\n A revival in India-Canada economic and strategic engagements<\/a> \u2014 especially through institutional investors, pension funds, and trade-focused agencies \u2014 can have a significant ripple effect across India\u2019s capital markets and investment ecosystem.<\/p>\n A revival in India-Canada economic and strategic engagements \u2014 especially through institutional investors, pension funds, and trade-focused agencies \u2014 can have a significant ripple effect across India\u2019s capital markets and investment ecosystem.<\/p>\n India said it aims to increase bilateral trade to $50 billion by 2030. Experts said $50 billion export is not just an economic milestone but signals a \u2018recalibration of trade priorities designed to build resilience and expand high-value sectors.\u2019<\/p>\n \u201cReal progress will depend on restoring strategic trust, and the groundwork being laid today reflects an attempt to undo much of the diplomatic strain experienced during the previous Canadian government,\u201d Prof Sanjal Shastri, Faculty of International Studies, FLAME University, told LiveMint.<\/p>\n 2- India as a growth market<\/p>\n Funds like CPPIB, CDPQ, and OTPP have substantial investments in Indian infrastructure, real estate, and renewable energy. A reset between India and Canada could accelerate pending proposals and new commitments.<\/p>\n Trade experts said the renewed diplomatic engagement has already raised expectations across the industry. \u201cIndia and Canada resuming FTA (free trade agreement) talks is a highly positive signal for exporters,\u201d Ajay Sahai, director general, Federation of Indian Export Organisations<\/a> (FIEO), told Mint recently.<\/p>\n \u201cFaster market access and lower tariffs can unlock real opportunities for Indian sectors like textiles, engineering goods, pharma and agri-products,\u201d he said<\/p>\n Reports said that the Canadian side, however, set a target of $70 billion by 2030. The gap between India\u2019s and Canada\u2019s targets reflects Canadian businesses\u2019 bullish assessment of the Indian market\u2019s potential. In 2024, bilateral trade between India and Canada in goods and services was around $22.6 billion, according to official numbers shared on the website of Consulate General of India<\/a> in Toronto<\/p>\n Remember, Canada and India launched talks about fifteen years ago for such a trade deal, but it was downgraded to a sectoral deal that would touch only specific industries<\/p>\n Canada, being highly trade-dependent, exports over 75 per cent of its goods to the US. While most US exports are protected under the United States\u2013Mexico\u2013Canada trade agreement<\/a> (USMCA), this deal is set for review in 2026.<\/p>\n India and Canada are finalising a deal to supply New Delhi with uranium, a further sign of warming ties after two years of strained diplomatic relations, according to The Globe and Mail<\/a>.<\/p>\n Also Read | India, Canada look to rebuild trade ties after diplomatic rift<\/a><\/p>\n The deal is likely to be worth approximately $2.8 billion, with a term of 10 years, according to individuals familiar with the development. The terms of the deal may be modified before the announcement, they added.<\/p>\n 3- Long-term stability<\/p>\n Trade talks between the two nations were suspended in late 2023 after then Canadian Prime Minister Justin Trudeau accused Indian government agents of possible involvement in the killing of Canada-based Khalistan separatist Hardeep Singh Nijjar<\/a> \u2014 a claim India rejected as \u201cabsurd.\u201d<\/p>\n The two countries have since moved to reset relations following the change of leadership in Ottawa in March.<\/p>\n In June, Modi met Carney at the G7 summit. The foreign ministers of both countries have met three times this year. And Canada\u2019s trade minister also visited India this month<\/p>\n \u201cThe long-term stability in India-Canada relations will, however, hinge on Canada\u2019s willingness to take tangible action against anti-India extremist elements that undermine bilateral confidence,\u201d Prof Shastri said.<\/p>\n 4- Stronger capital flows into India<\/p>\n Canada positions itself as a major player in climate finance. A renewed engagement could mean more funds earmarked for renewable energy, battery storage, and green hydrogen, they said. It would also mean direct Canadian support for India\u2019s energy transition goals<\/a> and participation in blended finance projects with Indian banks.<\/p>\n Canada, being highly trade-dependent, exports over 75 per cent of its goods to the US. While most US exports are protected under the United States\u2013Mexico\u2013Canada trade agreement (USMCA), this deal is set for review in 2026.<\/p>\n \u201cIf this reset continues meaningfully, renewed Canadian interest could unlock stronger capital flows into India through investment in technology, clean energy, and services, complementing India\u2019s manufacturing and digital-innovation strengths,\u201d Prof Shastri said.<\/p>\n 5- India-Canada trade volume<\/p>\n Over the years, India and Canada have developed a growing trade relationship, with bilateral trade encompassing goods such as energy, precious stones, machinery, and agricultural products. Canada exports a considerable amount of oil, lumber, pulses, and machinery to India. India’s exports to Canada<\/a> include pharmaceuticals, textiles, automotive parts, and IT services<\/p>\n Real progress will depend on restoring strategic trust.<\/p>\n One critical space, however, to watch is higher education, according to Prof Shastri. Student mobility and institutional collaborations represent one of the largest bridges between our two countries, he said.<\/p>\n