Explained: How renewed India-Canada relations can boost investment flows into India – 5 key points | today news

India and Canada have agreed to formally restart talks on an ambitious Comprehensive Economic Partnership Agreement (CEPA), as Prime Minister Narendra Modi and his Canadian counterpart Mark Carney met on the sidelines of the G20 leaders’ summit in Johannesburg on Sunday. This development underlines the continued improvement in relations between the two countries.

According to news agency AP, after the Modi-Carney meeting, Canadian Foreign Minister Anita Anand said on Monday that Canada and India will work quickly on a trade deal, marking a change in relations after two years of tense relations.

Anand said Ottawa has a new foreign policy in response to US President Donald Trump’s trade war and highlighted Carney’s goal of doubling non-US trade within ten years.

1-Revival in relations increases investor confidence

Decrease in diplomatic tensions improves investor confidence. The easing of tensions is a sign of political stability, which reduces perceived risk for Canadian pension funds, banks and corporations considering long-term investments in India.

A revival in India-Canada economic and strategic ties – particularly through institutional investors, pension funds and business-focused agencies – could have a significant impact on India’s capital markets and investment ecosystem.

India said it aims to increase bilateral trade to $50 billion by 2030. Experts said the $50 billion export milestone is not just an economic milestone but signals a ‘recalibration of trade priorities designed to build resilience and expand high-value sectors’.

“Real progress will depend on restoring strategic trust, and the foundation stone being laid today reflects an effort to resolve diplomatic tensions experienced during the previous Canadian government,” Sanjal Shastri, professor at FLM University’s Faculty of International Studies, told Livemint.

2- India as a growth market

Funds such as CPPIB, CDPQ and OTPP have substantial investments in Indian infrastructure, real estate and renewable energy. The rescheduling between India and Canada may accelerate pending proposals and new commitments.

Trade experts said the renewed diplomatic engagement has already raised expectations across the industry. “The resumption of FTA (free trade agreement) negotiations between India and Canada is an extremely positive sign for exporters,” Ajay Sahay, director general of the Federation of Indian Export Organizations (FIEO), told Mint recently.

“Faster market access and lower tariffs can open up real opportunities for Indian sectors like textiles, engineering goods, pharma and agri-products,” he said.

The Canadian side, however, has set a target of $70 billion by 2030, reports said. The difference between the targets of India and Canada reflects Canadian businesses’ rapid assessment of the potential of the Indian market. According to official data shared on the website of the Consulate General of India in Toronto, bilateral trade in goods and services between India and Canada stood at about $22.6 billion in 2024.

Remember, Canada and India began negotiations for such a trade agreement about fifteen years ago, but it was turned into a regional deal that would only touch specific industries.

Being highly trade-dependent, Canada exports more than 75 percent of its goods to the United States. While most US exports are protected under the United States–Mexico–Canada Trade Agreement (USMCA), the deal is set for review in 2026.

India and Canada are finalizing a deal to supply uranium to New Delhi, another sign of warming ties after two years of strained diplomatic ties. The Globe and Mail,

According to persons familiar with the development, the deal is likely to be worth around $2.8 billion with a term of 10 years. He said the terms of the deal could be changed before the announcement.

3- Long term stability

Trade talks between the two countries were suspended in late 2023 after then-Canadian Prime Minister Justin Trudeau accused Indian government agents of possible involvement in the killing of Canada-based Khalistan separatist Hardeep Singh Nijjar – a claim India rejected as “absurd”.

The two countries have moved toward resetting ties following a leadership change in Ottawa in March.

Modi had met Carney at the G7 summit in June. This year the foreign ministers of both the countries have met three times. Canada’s Trade Minister also visited India this month.

“However, long-term stability in India-Canada relations will depend on Canada’s willingness to take concrete action against anti-India extremist elements that undermine bilateral trust,” Professor Shastri said.

4- Strong capital inflow into India

Canada positions itself as a major player in climate finance. He said renewed engagement could mean earmarking more funds for renewable energy, battery storage and green hydrogen. It would also mean direct Canadian support for India’s energy transition goals and participation in blended finance projects with Indian banks.

“If this reset continues meaningfully, renewed Canadian interest could unlock strong capital flows into India through investments in technology, clean energy and services, which will complement India’s manufacturing and digital-innovation strengths,” Professor Shastri said.

5- India-Canada trade volume

Over the years, India and Canada have developed growing trade relations, with bilateral trade involving goods such as energy, precious stones, machinery and agricultural products. Canada exports significant quantities of oil, lumber, pulses and machinery to India. India’s exports to Canada include pharmaceuticals, textiles, automotive parts and IT services.

However, according to Professor Shastri, an important place to look is higher education. “Student mobility and institutional collaboration represent one of the greatest bridges between our two countries,” he said.

“We can see positive developments that will enable seamless academic pathways and research partnerships. Ultimately, deeper economic and academic cooperation can create a mutually beneficial model that supports economic expansion while strengthening people-centric diplomacy,” Professor Shastri told Livemint.