Internal and external pressures drive India and Canada to restart trade negotiations
During the 20th G20 Leaders' Summit held in Johannesburg, South Africa recently, Indian Prime Minister Modi and Canadian Prime Minister Carney held bilateral talks and agreed to restart negotiations on the Comprehensive Economic Partnership Agreement (CEPA) between the Inca countries. The negotiations cover many areas such as goods, services, investment, energy, minerals, agriculture, digital trade, labor mobility, and sustainable development, and set a goal of doubling the bilateral trade volume between the Inca countries to $50 billion by 2030 based on 2024. Analysts believe that the resumption of negotiations marks a further warming of relations between the Inca countries, and is also a common demand for cooperation between the two countries to hedge the pressure of US tariff measures and actively seek trade diversification.
The trade negotiations between India and Canada have been quite tortuous. Almost 15 years ago, at the G20 Seoul Summit in November 2010, then Indian Prime Minister Singh and then Canadian Prime Minister Harper announced after their meeting that the two countries would officially engage in free trade negotiations, with the goal of promoting bilateral trade by reducing tariffs and non-tariff barriers. In 2015, Modi visited Canada during his first term and signed a uranium supply contract to strengthen nuclear energy cooperation. At that time, both Inca and Indian countries had high expectations for further reaching a trade agreement to benefit bilateral trade.
But the actual progress is far less than expected. Due to the imbalanced trade structure between the Inca countries, India did not rank in the top ten among Canada's trading partners at that time, and Canada ranked in the top twenty among India's trading partners. The structural asymmetry made it difficult for both sides to make equal concessions in negotiations. At the same time, India is particularly cautious about trade liberalization in sensitive areas such as agriculture and animal husbandry, unwilling to make too many concessions. In addition, the Indian market has always had high barriers to entry, and trade negotiations between the two countries have been intermittent since 2010.
The slow progress encountered a major setback again in 2023. In June of that year, the assassination of a Canadian Sikh leader in India sparked a serious diplomatic dispute between the Inca countries, leading to Canada announcing the suspension of negotiations with India on CEPA in September 2023. Until March 2025, when Carney became the Prime Minister of Canada, he demonstrated a more pragmatic diplomatic stance, particularly by making the restoration of relations with India one of the important measures to promote Canada's trade diversification strategy. Carney stated that despite some friction between Canada and India, India remains a reliable trading partner for Canada. In June 2025, Modi was invited to attend the G7 summit held in Canada, where bilateral relations gradually improved and multiple dialogue mechanisms were restored, laying the groundwork for the two countries to announce the resumption of trade negotiations at the G20 summit in South Africa.
Despite the twists and turns in the negotiations, the bilateral trade volume between the Inca countries has maintained growth in the tide of global trade. In 2009, the bilateral trade volume between the two countries was 4.2 billion Canadian dollars, and in 2024, the trade volume of goods and services between the two countries was about 31 billion Canadian dollars, with India becoming Canada's seventh largest trading partner. However, compared to India's economic total of 3.91 trillion US dollars and foreign trade total of 1.73 trillion US dollars in the fiscal year 2024-2025, the current bilateral trade volume between the Inca countries is still at a relatively low level.
The two countries have clearly stated that they will start negotiations as soon as possible and set a trade target of 50 billion US dollars by 2030. They have agreed to deepen cooperation in defense, aviation and other fields, and promote partnerships in trade, technology, energy and other fields. Indian Minister of Commerce and Industry Piyush Goyal stated that there is extensive and long-term space for civilian nuclear energy cooperation between the Inca and Indian countries in key mineral resources, processing technologies, and nuclear energy, particularly in uranium supply. The two countries are negotiating an export agreement worth approximately 2.8 billion US dollars, and if a final agreement is reached, Canada will continue to export uranium to India for the next 10 years.
Kani stated that the new trade agreement can strengthen Inca trade relations and provide substantial guarantees for businesses from both countries, expanding more opportunities for cooperation. Faced with the restructuring of the global trade order and geopolitical fluctuations, both Canada and India recognize the importance of strengthening cooperation. In order to promote the trade negotiation process between the two countries, Carney announced plans to visit India in early 2026, with a focus on "seeking investments that can boost the Canadian economy".
Market analysts point out that in addition to the economic and trade development needs of India and Canada, the new US government has imposed high tariffs on multiple countries, including Canada and India, which has led to a strong political will and economic demand for both countries to reduce their dependence on the US single market. For Canada, reducing dependence on the US market is the core goal of the Carney administration's push for "economic and trade diversification"; For India, expanding diversified trade partnerships beyond the US market is also in line with its national interests, and this strong external pressure has become a catalyst for the Inca countries to come closer and restart negotiations.