On November 23, Indian Prime Minister Narendra Modi and Canadian Prime Minister Pierre Poilievre held a bilateral meeting on the sidelines of the G20 Johannesburg Summit. The two leaders agreed to restart the suspended Comprehensive Economic Partnership Agreement (CEPA) negotiations and set a target to double bilateral trade to $50 billion by 2030. They also confirmed the continuation and expansion of long-term cooperation in the civil nuclear energy sector, marking significant signals of thawing relations between the two nations.
External Pressures Drive Canadian Pivot
Canada’s push to reset ties with India stems largely from mounting external economic pressures. Since the current U.S. administration took office, Washington has imposed heavy tariffs on Canadian key exports including steel, aluminum, auto parts, and lumber. This has exposed Canada’s deep economic reliance on the United States, while U.S. rhetoric threatening Canadian sovereignty has further fueled strategic anxieties in Ottawa.
In response, the Poilievre government launched an “economic diversification” strategy, aiming to double exports to countries other than the United States within a decade. As the world’s fifth-largest economy with vast market potential, India emerged as a top cooperation priority for Canada’s diversification efforts.
Domestic Political Shifts Create Space
Domestic political changes in Canada have also paved the way for improved bilateral relations. During the Trudeau administration, the Liberal Party adopted a tough stance toward India to court support from domestic Sikh voters, with Sikh separatism becoming a major sticking point. The June 2023 assassination of Canadian-Sikh leader Hardeep Singh Nijjar triggered a diplomatic crisis, with India accusing Canada of harboring anti-India separatist forces and Canada criticizing India over religious freedom and minority rights.
Since assuming office, the Poilievre government has shifted course amid changing domestic sentiments. A latest report showed 58% of Canadians believe immigration levels are too high—the highest in 40 years. Facing public concerns over immigration capacity and U.S. demands to strengthen border controls, the government has adopted policies sharply different from Trudeau’s approach.
In September 2025, Canadian Public Safety Minister Gary Anandasangaree announced the formal listing of the Lawrence Bishnoi gang, led by an Indian national, as a terrorist entity and froze its assets. The move, widely seen as a gesture of goodwill from Canada, prioritizes law enforcement cooperation as a cornerstone for rebuilding trust and creating political space to ease tensions over Sikh-related issues.
Economic Complementarity and Potential Gains
The thaw in relations brings tangible economic prospects, driven by complementary economic structures between India and Canada. In 2024, bilateral trade reached approximately $22 billion, with Canadian service exports to India totaling $11.4 billion—yielding a significant trade surplus for Canada. Achieving the $50 billion trade target would further boost Canada’s economic interests and enhance its position in the global value chain.
Persistent Risks and Challenges
Despite the positive momentum, substantial challenges remain. India’s market features multiple barriers, including restricted access to service and manufacturing sectors, data localization requirements, foreign equity limitations, complex approval processes, and strict intellectual property rules—all posing hurdles for Canadian enterprises. India is also known for its tough and cautious stance in trade negotiations, meaning translating political willingness into concrete market access agreements will be a gradual process.
Economically, Canada’s reliance on the United States remains structurally unshakable. The $50 billion trade target accounts for only 3% of Canada’s total annual trade volume and is equivalent to just two weeks of Canada-U.S. trade. This gap means India cannot replace the United States as Canada’s primary economic partner in the foreseeable future.
Social risks further complicate the relationship. Increased economic cooperation may stimulate greater inflows of Indian immigrants and international students, exacerbating concerns over the strain on Canada’s public resources. This conflicts with the federal government’s policy goal of reducing temporary resident numbers and could trigger new social controversies. Additionally, negative public sentiment toward India remains prevalent in Canada, and divisions within the Sikh community—with some radicals supporting separatist movements—may spark further social tensions.
These economic, political, and social factors underscore that rebuilding comprehensive political trust between India and Canada will be a long-term endeavor. The current warming of relations reflects a strategic adjustment by Canada amid external pressures and domestic political shifts, rather than a fundamental reconciliation. While economic cooperation holds potential, its scale is insufficient to address Canada’s structural dependence on the United States. Issues such as Sikh separatism and complex public attitudes in Canada continue to introduce uncertainties, leaving the future trajectory of India-Canada relations subject to ongoing shifts.
