NEW DELHI: India and Canada have agreed to resume negotiations on a free trade agreement (FTA) that were suspended in September 2023, just before New Delhi was to host the G-20 Summit.
In the first meeting between Canadian Prime Minister Mark Carney and Prime Minister Narendra Modi on the sidelines of the G-7 summit in Kananaskis in Canada, both leaders made the decision to normalise the ties beginning with the early return of High Commissioners to the capitals.
“The leaders also discussed the importance of restarting the stalled negotiations on the Early Progress Trade Agreement (EPTA), with a view to paving the way for a Comprehensive Economic Partnership Agreement (CEPA),” a statement by the Ministry of External Affairs said.
Both sides also discussed opportunities for future collaboration in areas like clean energy, digital transformation, LNG, food security, critical minerals, higher education, mobility and supply chain resilience, the statement added.
The suspension of trade negotiations was the first step and after that the ties nosedived sharply as Canada’s then Prime Minister Justin Trudeau accused India of interference in its domestic affairs and targeting its citizens. By October 2024 India had expelled the Canadian High Commissioner and withdrawn its High Commissioner in Ottawa.
Apart from the change in government in Canada, the disturbance in world trade by the actions of US President Donald Trump is also forcing countries to stitch up new trade alliances. Canada, which is the second biggest exporter to the US after China – has been a special target of Trump.
Despite the political tensions trade between India and Canada continued to grow. Bilateral merchandise trade between India and Canada actually grew slightly during this period, from $ 8.3 billion in FY2023 to $ 8.4 billion in FY2024. India’s imports from Canada increased to $ 4.6 billion, while exports saw a marginal dip, falling to $ 3.8 billion. In 2024-25 India’s exports to Canada increased 9.8% on year to $ 4.2 billion while imports from Canada fell 2.3% on year to $ 4.4 billion. Apart from goods trade, both countries also have a substantial services trade.
The negotiations on a Comprehensive Economic Partnership Agreement (CEPA) with Canada were started in 2010 but could not make much progress.
The negotiations were relaunched in March 2022. While discussions on the comprehensive trade agreement were on, both sides were also discussing an interim agreement with a limited scope which they named as – Early Progress Trade Agreement (EPTA). The talks were suspended after both sides had held nine rounds of negotiations with the last round happening in July 2023.
India is seeking greater access to its traditional products and liberal visa norms for its professionals. Canada wants greater opening for its agriculture products and automobile sector in the Indian market.
Apart from the trade agreement India and Canada were also discussing an investment agreement – Foreign Investment Promotion Agreement.
Canadian pension funds have been big investors in India, putting money in key areas of infrastructure like infrastructure and energy. These funds continued their investments despite the political climate.
Portfolio investments from Canada into India are estimated at more than $ 75 billion. More than 600 Canadian companies have a presence in India, and more than 1,000 companies are active in the Indian market.
Source: The Financial Express
