In a groundbreaking diplomatic development, Canadian Prime Minister Mark Carney and Indian Prime Minister Narendra Modi have announced plans to launch negotiations for a Comprehensive Economic Partnership Agreement (CEPA), potentially transforming bilateral trade relations between the two nations after years of diplomatic tension.
Breaking News: Historic Trade Agreement Announced at G20 Summit
Meeting at the G20 summit in Johannesburg, South Africa, Prime Ministers Carney and Modi agreed to restart comprehensive trade negotiations that had been suspended since 2023. The announcement marks a dramatic thaw in relations between the two Commonwealth nations.
According to official statements, the proposed trade deal aims to more than double bilateral trade to $70 billion by 2030. "India is the world's fifth largest economy, and that means big new opportunities for Canadian workers and businesses," Prime Minister Carney emphasized in his social media announcement.
Key Highlights of the Agreement
The Comprehensive Economic Partnership Agreement will encompass multiple sectors including goods, services, investments, agriculture, digital trade, labor mobility, and sustainable development. This wide-ranging approach distinguishes it from the previously proposed sectoral deal that would have touched only specific industries.
India's Ministry of External Affairs confirmed the development and revealed that Prime Minister Modi extended an invitation to Carney to visit India in early 2026, which the Canadian leader accepted. This official state visit will likely serve as a platform to advance negotiations and strengthen bilateral relations.
What the Canada-India Trade Deal Means for Both Economies
Currently, trade between Canada and India remains relatively modest. In 2024, Canada exported $5.3 billion worth of goods to India and imported $8 billion, with total bilateral trade surpassing $30 billion. India ranks as Canada's seventh-largest goods and services trading partner, indicating significant untapped potential.
Sectors Poised for Growth
The trade agreement is expected to unlock opportunities across several key sectors. Canadian agriculture, particularly pulses, lentils, and wheat, could see expanded access to India's massive consumer market. Meanwhile, India's growing technology sector and pharmaceutical industry may find greater opportunities in the Canadian market.
Dinesh Patnaik, India's High Commissioner to Canada, noted that discussions have been progressing since the G7 summit, with International Trade Minister Maninder Sidhu meeting India's minister of petroleum and gas—a crucial sector for energy-hungry India.
From Diplomatic Crisis to Economic Cooperation
The road to this agreement has been extraordinarily challenging. Canada and India launched trade talks 15 years ago, but negotiations were downgraded to a sectoral approach and eventually suspended entirely in fall 2023 following severe diplomatic tensions.
The Nijjar Controversy
Relations between the nations froze after Canada publicly alleged that Indian government agents were linked to the extrajudicial killing of Sikh activist Hardeep Singh Nijjar on Canadian soil in 2023. The Royal Canadian Mounted Police (RCMP) later publicly accused Indian government agents of involvement in homicides, extortion, and threats on Canadian soil—allegations India has consistently denied.
Canadian Security Intelligence Service Director Dan Rogers recently suggested the agency must remain "very vigilant" against alleged threats from India, indicating that security concerns persist despite the warming economic ties.
Balancing Security and Economics
Prime Minister Carney has emphasized that Canada will not compromise on security while pursuing economic opportunities. "There's engagement with a variety of nations on protecting Canadians, and we will continue to do that," Carney stated, noting that Canada has established cooperation with Indian law enforcement and national security advisers.
Economic Impact and Strategic Diversification
The renewed focus on Canada-India trade comes amid broader economic pressures, particularly from U.S. President Donald Trump's protectionist trade policies affecting both nations. Sanjay Ruparelia, a politics professor at Toronto Metropolitan University, described the U.S. trade war as "the single biggest event that has changed the calculus both for governments and public opinion."
Canada's Diversification Strategy
Prime Minister Carney has committed to doubling non-U.S. exports by 2035, making trade diversification a cornerstone of Canada's economic strategy. Beyond India, Carney has announced discussions toward a potential Canada-South Africa Foreign Investment Promotion and Protection Agreement and signed onto an AI and technology partnership with India and Australia.
This strategic pivot recognizes that while the United States remains Canada's largest trading partner by far, over-dependence on a single market creates vulnerability. India's rapidly growing economy—projected to become the world's third-largest soon—represents an attractive alternative market for Canadian exporters.
Challenges and Concerns Moving Forward
Despite the positive developments, significant challenges remain. Canada's Sikh community, particularly the Khalistan independence movement, has expressed concerns about the timing and nature of diplomatic rapprochement with India.
Community Concerns
Sikhs for Justice held a referendum in Ottawa on the same day as the Carney-Modi meeting, advocating for an independent Sikh Punjab called "Khalistan." Inderjeet Singh Gosal, the new leader of the Canadian chapter who replaced the assassinated Hardeep Singh Nijjar, criticized the government's decision as premature, noting that "the extortions haven't stopped, the shootings haven't stopped."
The Indian government views the Khalistan referendum as a provocation and attack on its sovereignty, while Canada considers it a legitimate expression of free speech by Canadian citizens. This fundamental disagreement will continue to complicate bilateral relations.
The Path to Implementation
Negotiating a comprehensive trade agreement will take years and require compromise on sensitive issues including intellectual property protection, agricultural subsidies, and market access barriers. Both countries will need to manage domestic political pressures while pursuing mutual economic benefits.
Frequently Asked Questions
When will the Canada-India trade deal be finalized?
The two countries have agreed to launch negotiations for the Comprehensive Economic Partnership Agreement. Based on typical trade negotiations, the process could take 2-4 years before a final agreement is reached and ratified by both governments. Prime Minister Carney's planned visit to India in early 2026 will likely advance discussions.
How much is Canada-India trade currently worth?
In 2024, bilateral trade between Canada and India surpassed $30 billion. Canada exported $5.3 billion to India and imported $8 billion from India. The proposed trade deal aims to more than double this to $70 billion by 2030, making India one of Canada's top trading partners.
What products will benefit most from the trade agreement?
Key beneficiaries include Canadian agricultural exports (pulses, lentils, wheat), natural resources (potash, coal), and technology services. Indian pharmaceuticals, textiles, and information technology services would gain improved access to Canadian markets. The agreement will also address digital trade, investments, and labor mobility.
Have security concerns between Canada and India been resolved?
No, security concerns remain unresolved. Canada continues investigating allegations regarding Indian government agents' activities on Canadian soil. However, both nations have agreed to separate economic cooperation from security issues, maintaining dialogue on both fronts through different channels.
Why is Canada diversifying away from the United States?
While the U.S. remains Canada's largest trading partner, Prime Minister Carney aims to reduce over-dependence by doubling non-U.S. exports by 2035. This strategy provides economic resilience against U.S. trade policy changes and opens new markets in fast-growing economies like India, which is projected to become the world's third-largest economy.
Looking Ahead: A New Chapter in Canada-India Relations
The announcement of renewed trade negotiations between Canada and India represents a pragmatic approach to international relations—acknowledging that economic cooperation and security concerns can be managed through separate channels. While significant challenges remain, particularly regarding the Sikh community's concerns and ongoing security investigations, both nations recognize the immense economic potential of deeper partnership.
As negotiations proceed over the coming years, the success of this initiative will depend on both countries' ability to balance economic interests with domestic political sensitivities. For Canadian businesses and workers, the potential doubling of trade with one of the world's fastest-growing economies offers compelling opportunities in an increasingly multipolar global economy.
