What Happened
- India and Canada are expected to finalise Terms of Reference (ToR) for initiating free trade agreement negotiations during Canadian PM Mark Carney's upcoming visit to India in March 2026.
- Chief negotiators have been appointed on both sides: India's Brij Mohan Mishra and Canada's Bruce Christie will lead the talks.
- This marks a significant thaw after FTA talks were paused by Canada in 2023 following the diplomatic crisis over the killing of Hardeep Singh Nijjar.
- Both nations have agreed to restart talks from scratch given significant changes in the global trade landscape over the past two years.
- The two countries are targeting bilateral trade of $50 billion by 2030, up from approximately $9.36 billion in 2023.
- On November 23, 2025, PM Carney and PM Modi had formally agreed to launch negotiations for an ambitious Comprehensive Economic Partnership Agreement (CEPA).
Static Topic Bridges
Free Trade Agreements: Types and India's FTA Strategy
India has historically been cautious about FTAs, balancing market access concerns with the need for deeper economic integration. The proposed India-Canada CEPA would be among India's most ambitious trade agreements.
- Types of trade agreements (ascending levels of integration):
- Preferential Trade Agreement (PTA): Partial tariff reductions on select goods
- Free Trade Agreement (FTA): Elimination of tariffs/quotas on substantially all trade
- Comprehensive Economic Partnership Agreement (CEPA): Covers goods, services, investment, IPR, competition — more comprehensive than FTA
- Comprehensive Economic Cooperation Agreement (CECA): Similar to CEPA (India uses both terms)
- India's existing FTAs/CEPAs: ASEAN (2010), South Korea (2010), Japan (2011), Singapore (2005), Malaysia (2011), UAE (2022), Australia (2022 — ECTA interim deal), Mauritius (2021), EFTA (2025).
- India exited the Regional Comprehensive Economic Partnership (RCEP) in November 2019, citing concerns about Chinese goods flooding Indian markets.
- India is currently negotiating FTAs/CEPAs with the EU, UK, Canada, Israel, Peru, and GCC countries.
Connection to this news: The India-Canada CEPA represents a restart from the abandoned 2010-era negotiations. Starting from scratch allows both sides to incorporate new trade realities including digital trade, sustainability chapters, and India's updated industrial and agricultural priorities.
India-Canada Bilateral Relations: The 2023 Diplomatic Crisis and Recovery
The India-Canada relationship suffered its most severe crisis in 2023 following allegations of Indian involvement in the killing of a Canadian citizen, leading to diplomatic expulsions and a pause in trade and investment negotiations.
- September 2023: Canadian PM Justin Trudeau alleged "credible allegations" of Indian government involvement in the killing of Hardeep Singh Nijjar on Canadian soil in June 2023.
- Nijjar was the chief of the Khalistan Tiger Force (KTF) and was designated a terrorist by India.
- Both countries expelled senior diplomats in tit-for-tat actions.
- FTA/CEPA negotiations, which had completed nine rounds by July 2023, were paused by Canada.
- Bilateral trade remained relatively stable at approximately $9.36 billion in 2023 (Indian exports: $5.56 billion, Canadian exports: $3.80 billion).
- Relations began thawing under new PM Mark Carney (took office January 2025), who adopted a more pragmatic approach to India.
- November 2025: Modi-Carney agreement to formally launch CEPA negotiations.
Connection to this news: The resumption of trade talks reflects a pragmatic recalibration on both sides, driven partly by both countries seeking to diversify trade partnerships amid global tariff disruptions, particularly the impact of US tariffs under the Trump administration.
WTO and Multilateral vs. Bilateral Trade Architecture
The proliferation of bilateral FTAs exists alongside the multilateral trading system anchored by the WTO. India's engagement with both tracks reflects the tension between multilateral gridlock and bilateral pragmatism.
- The WTO (established 1995, successor to GATT 1947) is the multilateral body governing international trade with 166 members.
- The Doha Development Round (launched 2001) has been effectively stalled since 2008, pushing countries toward bilateral and regional FTAs.
- Most Favoured Nation (MFN) principle under GATT Article I requires equal treatment for all WTO members — FTAs are an exception permitted under Article XXIV (for goods) and Article V of GATS (for services).
- India's average applied tariff is approximately 17%, higher than most developed economies, making India an attractive market for FTA partners seeking tariff concessions.
- Trade Facilitation Agreement (TFA) entered into force in 2017, committing WTO members to streamline customs procedures.
Connection to this news: The India-Canada CEPA negotiations occur against the backdrop of a fragmenting global trade order where bilateral deals have become the primary mechanism for deepening economic integration, especially as the WTO's multilateral framework remains gridlocked.
Key Facts & Data
- $50 billion: Bilateral trade target by 2030
- $9.36 billion: Current India-Canada bilateral trade (2023)
- 9 rounds: FTA negotiations completed before the 2023 pause
- November 23, 2025: Modi-Carney agreement to launch CEPA negotiations
- March 2026: Expected finalisation of Terms of Reference during Carney's India visit
- 2010: Year India-Canada CEPA negotiations originally began
- 2023: Year talks were paused following the Nijjar diplomatic crisis
- India's existing FTAs/CEPAs: ASEAN, South Korea, Japan, Singapore, Malaysia, UAE, Australia, Mauritius, EFTA
- Article XXIV of GATT: Legal basis for FTAs under WTO framework
- RCEP: India withdrew in November 2019