What Happened
- Canadian Prime Minister Mark Carney began an overseas trade trip on February 26, 2026, starting with India (Mumbai then New Delhi), followed by Australia and Japan — a deliberate pivot to diversify Canadian trade away from dependence on the United States under the Trump administration's tariff regime.
- Carney met with PM Narendra Modi; both sides agreed to advance the Canada-India Comprehensive Economic Partnership Agreement (CEPA) negotiations, which were formally relaunched in November 2025 after a long hiatus.
- Bilateral trade stands at approximately $30.8 billion (2024); the two sides have set a target of more than doubling this to $70 billion by 2030.
- The visit is widely described as a "diplomatic reset" — the first significant high-level engagement since the India-Canada diplomatic crisis triggered by the Nijjar affair in September 2023, during which both sides expelled diplomats and India suspended visa operations in Canada.
- India invited Carney to the G7 summit in Kananaskis (Canada), signalling mutual interest in warming relations; Carney's election victory over Justin Trudeau's Liberal party under a new leadership changed the political atmosphere for bilateral re-engagement.
Static Topic Bridges
India-Canada Diplomatic Crisis (2023) — The Nijjar Affair
The India-Canada diplomatic relationship sharply deteriorated in September 2023 when then-Canadian PM Justin Trudeau publicly alleged in Parliament that "credible evidence" linked Indian government agents to the killing of Hardeep Singh Nijjar — a Canadian citizen and Khalistan separatist leader — outside a Sikh temple in Surrey, British Columbia (June 2023). India rejected the allegations as "absurd" and "motivated." Subsequent months saw mutual expulsion of diplomats, suspension of Indian visa services in Canada, and a virtual freeze in high-level engagement.
- Hardeep Singh Nijjar: Canadian citizen, Sikh separatist, leader of Khalistan Tiger Force; killed June 2023 in Surrey, BC; designated terrorist by India in 2020
- India's position: Khalistan movement is a designated terrorist organisation under India's Unlawful Activities (Prevention) Act (UAPA); India considers Canada to have provided tacit sanctuary to Khalistan activists
- Canadian actions (September-October 2023): Expelled Indian diplomat; India retaliated; India suspended visa operations; Canada recalled 41 diplomats after India threatened to revoke diplomatic immunity
- Trudeau government: Relations remained frozen throughout 2024-25; Trudeau resigned January 2025; Carney won Liberal leadership and subsequently a snap election
- Legal proceedings: Several individuals with alleged Indian government links were arrested in Canada and the US in 2024 in connection with plots against Sikh activists
Connection to this news: Carney's visit represents the first meaningful attempt to move past the Nijjar affair and normalise relations. The shift in Canada's political leadership from Trudeau to Carney created an opportunity both sides have chosen to capitalise on, driven partly by the new Trump-era US trade pressure forcing Canada to diversify partnerships.
CEPA — Comprehensive Economic Partnership Agreement Mechanics
A Comprehensive Economic Partnership Agreement (CEPA) is a broad free trade agreement covering goods, services, investment, and related areas. India has signed CEPAs with Japan (2011), South Korea (2010), and UAE (2022). The Canada-India CEPA was first discussed in the early 2010s; negotiations stalled repeatedly due to political and trade disagreements. They were formally relaunched in November 2025.
- India's existing CEPAs: Japan (2011), South Korea (2010), UAE (2022, came into force May 2022), Mauritius (2021)
- India-UK FTA: Under negotiation (India's largest ongoing FTA negotiation); separate from CEPA but similar scope
- Canada-India CEPA relaunch: November 2025; formal negotiation structure agreed at G20 Kananaskis 2025
- Coverage: Goods, services, investment, agriculture, digital trade, labour mobility, sustainable development
- India's FTA stance: India has been selective — historically concerned about agricultural market access demands and services visa reciprocity
- India's trade negotiation priorities: Seeking market access for IT services, pharma, textiles; Canada seeking market access for agricultural products (wheat, pulses, canola), pension fund investment
Connection to this news: The CEPA talks are central to Carney's India visit. Both countries are motivated by the Trump tariff environment — Canada needs to diversify from the US (which takes ~75% of Canadian exports); India sees an opportunity to deepen trade ties with a G7 country and gain access to Canadian pension fund capital for infrastructure.
Canada's Strategic Pivot — US Dependence and Diversification
Under the Trump administration's tariff regime (25% tariffs on Canadian goods threatened/imposed from early 2025), Canada faces an acute vulnerability: approximately 75% of Canadian exports go to the United States. Carney's simultaneous visits to India, Australia, and Japan represent a deliberate strategy to build alternative trade relationships — mirroring what India calls "strategic autonomy" in trade policy.
- Canadian exports to US: ~75% of total Canadian merchandise exports — extreme trade concentration
- Trump tariffs on Canada: 25% tariffs threatened/partially imposed on Canadian goods (steel, aluminium, consumer goods) from early 2025
- Carney's trade tour: India (Feb 26-March 2), Australia, Japan — all G20 major economies with growing middle classes and strategic alignment concerns with US
- Canada's key exports to India: Pulses (lentils), coal, newsprint, potash; growing education services (large Indian student diaspora in Canada)
- India's key exports to Canada: Pharmaceuticals, IT services, garments, machinery
- Indian diaspora in Canada: ~1.8 million (one of Canada's largest ethnic communities); politically significant for Canadian domestic politics
Connection to this news: The US factor makes this visit more than just bilateral repair — it is part of a structural reshaping of Canada's trade architecture. For India, it provides an opportunity to attract Canadian pension fund capital (Canada's CPPIB, Ontario Teachers, OMERS hold large infrastructure mandates) into India's infrastructure sector.
India's Approach to Trade Diversification — FTA Strategy
India's trade policy has undergone a significant reorientation since 2021. After years of pulling out of major regional FTAs (notably withdrawing from RCEP in November 2019, citing concerns about Chinese goods), India has shifted to a selective bilateral FTA strategy — targeting major economies with which India has a services advantage.
- India withdrew from RCEP: November 2019 (15-nation Regional Comprehensive Economic Partnership); concern about Chinese manufacturing competitiveness
- India's active FTA negotiations: UK, Canada, EU, GCC (Gulf Cooperation Council); Australia ECTA (Economic Cooperation and Trade Agreement) signed April 2022
- India-UAE CEPA: Signed February 2022; came into force May 2022 — India's fastest FTA negotiation (completed in ~88 days); seen as a template
- India's FTA trade share: Only ~25% of India's trade is covered by FTAs (significantly lower than many Asian peers)
- India's services surplus: India is a major exporter of IT/software services, professional services — key demand in FTA with Canada
Connection to this news: India-Canada CEPA fits India's selective, bilateral FTA strategy. India's interest is primarily in: (1) Canadian market access for pharmaceutical generics, (2) IT services and Mode 4 (temporary movement of natural persons) provisions, (3) Canadian pension fund capital for infrastructure, and (4) managing the large Indian student and diaspora community in Canada.
Key Facts & Data
- Carney's India visit dates: February 26 – March 2, 2026 (Mumbai then New Delhi; Modi meeting March 2)
- India-Canada bilateral trade (2024): ~$30.8 billion; target: $70 billion by 2030
- India-Canada CEPA: Formally relaunched November 2025; initial discussions from early 2010s
- Nijjar incident: June 2023 (Surrey, BC); diplomatic crisis erupted September 2023
- Indian diplomats expelled by Canada: October 2023 (India recalled 41 Canadian diplomats, Canada expelled Indian diplomat)
- Indian students in Canada: ~430,000 (one of largest international student populations; numbers moderated after 2023 crisis)
- Indian diaspora in Canada: ~1.8 million
- Canada's exports to US: ~75% of total merchandise exports
- India-UAE CEPA: Signed February 2022; effective May 2022
- India withdrew from RCEP: November 2019
- India-Australia ECTA: Signed April 2022