India and Canada thaw tensions as trade talks restart

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India and Canada are thawing a long chill in their relations. Indian Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney met on the sidelines of the G20 summit in South Africa to restart discussions on a CEPA.

The decision marks a significant reversal after a two-year hiatus in trade talks. According to India’s Ministry of External Affairs, the two leaders decided that negotiations will soon be undertaken on a “high-ambition” agreement, which could potentially open markets and create new investment opportunities.

Carney accepted Modi’s invitation to visit India early in the new year. Officials from both governments will begin technical discussions ahead of that visit. 

The two leaders hope to boost bilateral trade to $70 billion by 2030. Last year, trade was around C$31 billion (US$22 billion). Canada seeks stronger access to India’s rapidly growing economy, while India aims for deeper ties with a G7 partner.

Diplomatic efforts restore trust after the rift

India-Canada relations have been strained since a major diplomatic spat in 2023. Canada had accused India of complicity in the killing of a Sikh separatist leader, Hardeep Singh Nijjar, in its Vancouver area.

The Canadian authorities offered what they described as credible evidence that agents linked to the Indian government were involved. India dismissed the accusations as baseless. The standoff led to wide diplomatic expulsions.

Both countries recalled their top diplomats and suspended significant diplomatic, trade, and military ties. It would be nearly two years before the relationship thawed much further. 

The diplomatic channels largely froze along the way. Formal engagement stalled, including talks on trade and economic cooperation. Then came new developments in early 2025 under the leadership of new leaders in Canada. Mark Carney, who later became the Governor of the Bank of Canada, prioritized repairing relations with India. 

He pledged to start rebuilding trust and getting the government involved again. That shift in tone opened a door for a conversation. Behind the scenes, the two governments started quietly easing tensions. They restored contact among senior diplomatic and security personnel. They met behind closed doors to discuss national security issues, and intelligence exchanges continued. They also reengaged in conversation on trade and investment, showing a greater willingness to negotiate. 

New opportunities open as talks restart

Both countries are now preparing for a range of new opportunities as trade negotiations resume. Following a nearly two-year hiatus, Canada and India see a renewed dialogue as an opportunity to restore commercial relations. 

Education is one of the country’s strongest bridges, as Canada hosts one of the largest populations of international students from India worldwide. 

As relationships improve, officials expect to see less friction in visa processes, more research collaborations, and new institutional exchanges. Both governments have committed to supporting further student mobility and academic collaboration. 

Agriculture is another priority for the two countries. Canada is one of the world’s major producers of pulses, grains, and fertilizers. India is a vast and sprawling country with an increasingly discerning palate. Reopening the talks would allow each side to negotiate reduced tariffs and more predictable rules on imports, along with increased cooperation on food security. 

The new agenda also places a focus on clean energy and climate technology. Canada is looking to export expertise in hydrogen, carbon capture, and renewable energy. What India really needs are partners who will work to steer the country’s future away from dependence on fossil fuels.

This renewed dialogue forms a path for companies in both countries to build green infrastructure. Civil nuclear technology is likely to re-emerge as a key area of cooperation. Canada has been a supplier of nuclear fuel and technology for generations. 

India is ramping up its civilian nuclear programme to accommodate increasing electricity requirements. With diplomatic tensions easing, nuclear cooperation, once perceived as too sensitive, can move forward with greater confidence, officials said. 

The mobility of skilled workers is another significant opportunity. Canada struggles with labour gaps in healthcare, transportation, construction, and other areas of the economy; India, a country with a rich pipeline of skilled laborers. 

While trade negotiations resume, both governments are exploring easier avenues for temporary and long-term work arrangements that they believe will benefit both economies.

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