BY Rosemary
India and Canada agreed Monday to deepen economic cooperation and accelerate negotiations toward a comprehensive trade pact, signaling a significant thaw in relations after nearly two years of diplomatic strain.
Following bilateral talks in New Delhi, Indian Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney announced plans to finalize a comprehensive economic partnership agreement aimed at substantially increasing trade flows between the two countries. Modi said both sides were working toward raising bilateral trade to $50 billion by 2030, a target that would represent a sharp increase from current levels.
Negotiations over a long-discussed trade agreement regained momentum last year as Carney sought to re-engage with New Delhi, restore high-level diplomatic dialogue and stabilize a relationship that had deteriorated sharply in 2023. Carney said Monday that officials were targeting the end of this year to conclude the deal, describing the effort as more than a reset.
“This is not merely the renewal of a relationship,” Carney said after the meeting. “It is the expansion of a valued partnership with new ambition, focus, and foresight.”
The renewed push reflects shared economic interests. India, one of the world’s fastest-growing major economies, represents a vast market for Canadian natural resources, technology and educational services. Canada, in turn, is seen by New Delhi as a stable supplier of energy, agricultural products and critical minerals essential for India’s expanding manufacturing and clean energy sectors.
Beyond trade, the two leaders announced the signing of a nuclear cooperation agreement under which Canada will supply uranium to India for civilian energy use. The arrangement builds on earlier civil nuclear understandings and is intended to strengthen India’s energy security as it seeks to expand low-carbon power generation.
Modi also said both countries would intensify collaboration in defense manufacturing and maritime domain awareness, an area of growing importance amid shifting geopolitical dynamics in the Indo-Pacific region. Officials exchanged several memoranda of understanding covering cooperation in critical minerals, energy transition initiatives and cultural exchanges.
Relations between Ottawa and New Delhi had reached a low point following allegations by Canadian authorities in 2023 that India was involved in the killing of a Canadian Sikh activist near Vancouver. India strongly denied the accusations and countered that Canada had failed to curb the activities of Sikh separatist groups advocating for Khalistan, an independent Sikh homeland. The movement is banned in India, which considers it a threat to national security.
The diplomatic fallout led both countries to expel senior diplomats and scale back visa services, disrupting travel and business ties. Trade talks stalled amid the escalating tensions, and political rhetoric on both sides hardened.
Signs of improvement emerged last year when Carney invited Modi to attend the G7 summit in Alberta, a move viewed as an effort to reopen channels of communication. Since then, officials have worked quietly to rebuild trust and resume structured dialogue on economic cooperation.
For Canada, strengthening ties with India is part of a broader strategy to diversify trade relationships beyond the United States. Carney has pledged to double Canada’s non-U.S. exports over the next decade, arguing that evolving U.S. tariff policies and trade uncertainties have created headwinds for Canadian businesses. Following his visit to India, Carney is scheduled to travel to Australia and Japan as part of that diversification effort.
India, meanwhile, has been expanding its global trade footprint through new bilateral and regional agreements. A deal with Canada would complement India’s outreach to other advanced economies and provide Canadian firms greater access to sectors ranging from infrastructure and digital services to agriculture and clean energy.
Analysts say the ambitious $50 billion trade target will depend on the scope and depth of the final agreement, including reductions in tariffs, improved market access and clearer investment protections. Sensitive issues — such as agricultural quotas, labor mobility and regulatory standards — remain under negotiation.
Still, Monday’s announcements marked a notable shift in tone. After months of tension and diplomatic recriminations, both governments signaled a desire to move beyond past disputes and anchor their relationship in economic pragmatism. Whether the renewed engagement can fully overcome political sensitivities remains to be seen, but the commitment to conclude a comprehensive agreement by year’s end suggests that both sides see strategic value in rebuilding and expanding one of their most significant bilateral partnerships.
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