India-Canada Eye Strategic Partnership Amid Shifting Global Trade Dynamics

Posted by Written by Archana Rao Reading Time: 5 minutes

India and Canada have experienced strained bilateral relations in recent years. However, their economic ties have remained constructive. With the recent election of a new Canadian Prime Minister, India may consider renewing its efforts to enhance diplomatic engagement with Canada.

This renewed focus comes as India intensifies its outreach to global markets in an effort to boost export opportunities ahead of US President Donald Trump’s April 2, 2025, tariff deadline.

A diplomatic reset for India and Canada

The leadership transition in Canada, marked by Justin Trudeau’s resignation in January 2025 and the appointment of Mark Carney as Prime Minister, has signaled a potential turning point in India–Canada relations. Trudeau’s nearly decade-long tenure, though marked by efforts to strengthen bilateral cooperation, ultimately saw relations between the two nations deteriorate due to a series of diplomatic challenges. These tensions not only impacted bilateral ties but also posed constraints on the effective implementation of Canada’s broader Indo-Pacific Strategy.

Carney’s entry into office has brought a renewed sense of optimism and the prospect of a diplomatic reset. His approach to foreign policy is viewed as more pragmatic and commercially oriented, offering an opportunity to reframe India–Canada engagement through a more balanced and forward-looking lens. His emphasis on trade diversification and economic diplomacy complements India’s emergence as a global growth engine, paving the way for enhanced collaboration across key sectors.

Crucially, Carney’s intention to strengthen ties with India is seen as a strategic step in revitalizing Canada’s Indo-Pacific outreach. As India continues to expand its global trade footprint and Canada seeks to recalibrate its position in the Asia-Pacific, this diplomatic shift could mark the beginning of a more constructive and enduring bilateral relationship.

Carney calls for snap elections in Canada amid rising global trade tensions

As per several reports, Carney is planning to call a snap federal election for April 28, ahead of the originally scheduled October 20 date, in a bid to capitalize on the Liberal Party’s recent surge in popularity. Having secured leadership of Canada’s Liberal Party in March 2025, Carney has framed Trump’s imposition of a 25 percent tariff on Canadian goods—excluding automotive and energy sectors—as a serious threat to Canada’s economy. He has pledged to resist U.S. economic pressure, asserting a strong stance against Washington’s trade policies. This development could have broader implications for Canada’s external trade strategies, including its evolving economic relationship with India, as both countries look to reinforce trade diversification in response to shifting geopolitical dynamics.

Trump’s upcoming imposition of new tariffs from April 2, 2025, is poised to have economic implications for both India and Canada, key trading partners of the U.S. For Canada, the tariffs represent a direct economic challenge, with concerns about a potential recession if trade flows are severely impacted.

Find Business Support
Build Your Asia Business with Turnkey Market Entry and Cross-Regional Support

On the other hand, India has begun taking proactive steps by formulating the Terms of Reference (ToR) for a proposed bilateral trade agreement with the U.S., in anticipation of the impending tariff regime. This strategic move reflects India’s intent to safeguard its trade interests and ensure continued market access.

The unfolding situation highlights the growing urgency for both India and Canada to diversify their trade portfolios and strengthen alternative economic partnerships, including enhanced bilateral cooperation between the two countries, to reduce dependence on the US and cushion against global trade volatility.

India–Canada EPTA: Strategic pathway to deeper trade engagement

An Early Progress Trade Agreement (EPTA) between India and Canada can lead to a strategic interim framework aimed at enhancing bilateral economic cooperation. Positioned as a precursor to the more comprehensive Comprehensive Economic Partnership Agreement (CEPA), the EPTA seeks to build momentum in priority areas where both countries can achieve early and tangible benefits.

Considered as a foundational step toward a full-fledged free trade agreement, the EPTA aims to facilitate faster market access, lower trade barriers, and strengthen investor confidence, even as broader CEPA negotiations continue. It reflects both countries’ intent to unlock mutual economic opportunities through a phased and pragmatic approach.

For India, the EPTA aligns with its ongoing trade diversification strategy, which focuses on broadening its export markets beyond conventional partners. For Canada, the agreement complements its Indo-Pacific Strategy, reinforcing its objective to strengthening ties with India—one of the fastest-growing major economies in the region.

Although talks around EPTA have been in progress since 2022, negotiations have encountered occasional delays, primarily due to diplomatic and political challenges. 

Resilient trade recovery between India and Canada

India–Canada trade relations in 2025 are evolving against a backdrop of structural economic complementarities and global realignments. While diplomatic hiccups have occasionally dampened momentum, trade volumes have steadily increased.

India-Canada Trade Relations Year-on-Year (Value in US$ Million)

Financial year

Trade activities

Value

FY2015-16

Export

2,018.42

Import

4,234.03

FY2016-17

Export

2,004.12

Import

4,131.52

FY2017-18

Export

2,506.15

Import

4,728.51

FY2018-19

Export

2,851.42

Import

3,515.41

FY2019-20

Export

2,851.79

Import

3,880.33

FY2020-21

Export

2,960.77

Import

2,686.43

FY2021-22

Export

3,763.98

Import

3,132.78

FY2022-23

Export

4,109.74

Import

4,167.56

FY2023-24

Export

3,845.29

Import

4,553.24

FY2024-25*

(April-December)

Export

3,125.29

Import

3,530.39

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

*India’s import-export data for FY2024-25 is available from April 1, 2024 to December 31, 2024. The complete trade data will be available post March 31, 2025. 

Find Business Support
We can help you set up a trading company

On the one hand, India’s export portfolio to Canada is broad-based, encompassing commodities in pharmaceuticals, textiles, chemicals, industrial machinery, and IT services. On the other hand, Canadian exports to India are largely resource-driven, including pulses, fertilizers, wood pulp, aerospace components, and energy products. 

Beyond goods and services, the education sector has emerged as a vital link between the two countries. Canada continues to be one of the most preferred destinations for Indian students, whose growing numbers contribute to its labor market.

Canadian investment in India as of 2024

Canada remains a key contributor to India’s foreign investment landscape, serving as a substantial source of both foreign portfolio investment (FPI) and long-term institutional capital. As per data from the Department for Promotion of Industry and Internal Trade (DPIIT), total Canadian foreign direct investment (FDI) into India reached US$4.16 billion between April 2000 and December 2024, underlining a steadily growing economic partnership.

Find Business Support
Grow Your Presence in India with Complete Market Entry and Cross-Regional Support

Canadian institutional investors have increasingly expanded their presence across India’s high-growth sectors. Leading the charge are prominent entities such as the Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan (OTPP), which have significantly deepened their investments in areas including real estate, logistics parks, renewable energy, and digital infrastructure. Notably, CPPIB alone invested approximately US$838 million in India during the first quarter of FY2024–25, demonstrating continued confidence in the Indian market’s long-term growth trajectory.

Brookfield Asset Management, a Canadian-American investment firm, has also scaled up its Indian portfolio, particularly in industrial warehousing and energy storage. A landmark deal further reinforced Brookfield’s footprint in India when, on September 12, 2024, its sponsored Data Infrastructure Trust (DIT)—along with co-investors such as British Columbia Investment Management Corporation (BCI) and GIC—completed the acquisition of 100 percent of American Tower Corporation’s India operations (ATC India). This acquisition, cleared by the Competition Commission of India (CCI), involved approximately 76,000 telecom infrastructure sites, with a total enterprise value of INR 182 billion (US$2.11 billion). 

India’s growing investment footprint in Canada

Meanwhile, India’s outbound investments in Canada have witnessed a steady rise, reflecting the deepening economic engagement between the two countries. According to the 2023 report titled “From India to Canada: Economic Impact and Engagement,” Indian companies have invested approximately CA$6.6 billion in Canada, generating nearly 17,000 jobs across the country. The report highlights the increasing presence and contribution of Indian businesses to the Canadian economy, indicating a continued bilateral investment flows between the two countries.

Indian enterprises have expanded their operations across key Canadian cities such as Toronto, Vancouver, and Montreal, with growth in sectors such as information technology, pharmaceuticals, and engineering services. Major Indian pharmaceutical firms like Sun Pharma and Lupin have boosted investments in manufacturing and research facilities in Canada. These efforts are aimed at strengthening their supply chains and meeting the growing demands of both the North American and global markets.

Simultaneously, Indian IT companies, including Infosys and Wipro, have reinforced their Canadian presence by setting up delivery centers, training hubs, and innovation facilities, enabling them to better serve clients across the broader North American region.

Outlook for 2025

As 2025 progresses, India–Canada trade relations appear to be on a path of cautious recovery and strategic realignment. The potential for economic cooperation is vast, but success will depend on deliberate efforts to rebuild trust, institutionalize engagement mechanisms, and address lingering political constraints.

If Carney can deliver on his promise of prioritizing economic pragmatism while navigating domestic and diplomatic sensitivities, the bilateral relationship between India and Canada could be redefined—one driven by shared economic interests, innovation, and strategic collaboration.

(US$1 = INR 85.9)

About Us

India Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Delhi, Mumbai, and Bengaluru in India. Readers may write to india@dezshira.com for support on doing business in India. For a complimentary subscription to India Briefing’s content products, please click here.

Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China, Hong Kong SAR, Dubai (UAE), Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Bangladesh, Italy, Germany, the United States, and Australia.