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Tanvi Thara Harendra Jha
8 March 2026 |
What happened?
On 02 March, India and Canada issued a joint statement outlining new initiatives to expand collaboration and innovation between the two countries.
On the same day, the visit resulted in the signing of six agreements and several memoranda of understanding (MoUs), which include critical minerals, energy collaboration, uranium supply for civil nuclear energy, cultural exchanges, education, and research partnerships.
During the visit, two PMs noted that strengthened institutional engagement would support expanded bilateral energy trade, including liquefied natural gas, liquefied petroleum gas, crude oil, refined petroleum products, potash, and uranium supply offtake. In this regard, they welcomed the conclusion of a CAD 2.6 billion commercial agreement between Cameco and the Department of Atomic Energy for the long-term supply of uranium to support India’s civil nuclear energy generation, clean energy transition objectives, and long-term energy security.
Canada reaffirmed its plans to expand heavy oil export infrastructure and LNG supplies to the Indo-Pacific market, with Canada’s stated goal of producing 50 million tonnes of LNG per year by 2030 and up to 100 million tonnes by 2040.
What is the background?
1. Increasing economic engagement and industry collaboration
Trade and investment between India and Canada have grown steadily in recent years. According to Global Affairs Canada, bilateral merchandise trade between India and Canada increased from roughly CAD 6.6 billion in 2015 to about CAD 12-13 billion by 2024-2025. Canada exports commodities to India, including lentils and other pulses, potash fertilisers, wood products, and uranium used in civil nuclear energy. India’s exports to Canada include pharmaceutical products, textiles, machinery, organic chemicals, and information technology services. Cooperation between the two countries has expanded beyond trade to include clean energy, nuclear energy, critical minerals, artificial intelligence, higher education, and research collaboration. These sectors remain key areas of bilateral activity.
2. The Comprehensive Economic Partnership Agreement (CEPA) negotiations
India and Canada have spent several years discussing a Comprehensive Economic Partnership Agreement to enhance bilateral economic relations. CEPA is a proposed free trade agreement aimed at reducing tariffs, improving market access for goods and services, and facilitating investment between the two countries. The areas to be discussed in the agreement will include agricultural, manufacturing, and service cooperation, as well as technology collaboration. Nevertheless, the negotiation process has been slow, and the deal has not yet been materialized.
3. Overcoming the diplomatic tensions since 2023
In September 2023, the relationship between the two countries touched a low, when the Canadian government charged India with the assassination of a Sikh separatist activist in Canada. India denied the charges and blamed Canada for letting extremist groups associated with the Khalistan movement run their operations in its territory. The tensions led to a diplomatic crisis, with both countries expelling top diplomats and closing visa operations.
Under the new Canadian government, the two governments have sought to reconnect over the past year by holding meetings at international forums and conducting diplomatic consultations. These relations contributed to the reopening of economic cooperation and trade negotiations, which laid the groundwork for a new bilateral dialogue between the two countries.
What does it mean?
First, a bid to stabilise diplomatic relations. The visit indicates both governments' efforts to restore working relationships following the tensions that emerged in 2023. By focusing on collaboration in economic areas, technology relationships, and trade talks, both parties appear to be concentrating on areas where they share common interests. However, disagreements have played out politically in the past.
Second, a new impetus to trade talks. It is possible to conclude that economic cooperation is a key part of the relationship, as evidenced by the decision to expedite negotiations on the Comprehensive Economic Partnership Agreement. In the event of its realisation, the agreement would widen trade flows and enhance market access for businesses in sectors such as agriculture, services, and manufacturing.
Third, increasing collaboration in key economic domains. The focus on critical minerals, clean energy, and technological cooperation is tied to broader global trends, as countries pursue partnerships in new industries and the energy transition. Collaboration across sectors may strengthen economic relations and support industrial and technological development in both countries.
