New Delhi, April 21: Renewed trade negotiations between India and Canada have reopened the possibility of a long-term economic partnership, with policymakers viewing the latest engagement as a critical opportunity to stabilise bilateral ties that have previously been disrupted by political tensions.
The talks were relaunched during the March visit of Canadian Prime Minister Mark Carney, marking a reset in economic dialogue between the two countries. Former High Commissioner to Canada, Sanjay Kumar Verma, has described the renewed engagement as a second chance to build a durable trade framework in a changing geopolitical environment.
Verma noted that Canada’s heavy economic reliance on the United States has emerged as a strategic constraint, particularly amid rising global uncertainties. In this context, India is being positioned not only as an alternative market but as a long-term strategic partner capable of supporting diversification efforts.
The shift in approach towards an Early Progress Trade Agreement (EPTA), initiated in 2022, reflects a more pragmatic pathway for negotiations. According to Verma, this framework can serve as a foundation for gradually developing a Comprehensive Economic Partnership Agreement (CEPA), rather than attempting an immediate, all-encompassing deal.
The proposed CEPA is expected to evolve in stages, beginning with consolidation of existing progress under the EPTA. Future phases may include more complex elements such as investment protection, digital trade, and regulatory cooperation, while sensitive sectors like agriculture, intellectual property, and public procurement could be addressed at a later stage when conditions are more favourable.
Trade in goods between India and Canada remains relatively modest but is seen to have potential for expansion through improved market access and simplified rules of origin. Services trade, already a key component of the bilateral relationship, is expected to deepen further, particularly in information technology, education, and professional services.
The report also underscores the importance of customs facilitation in enhancing trade efficiency, noting that streamlined processes can reduce transaction costs and improve predictability for businesses operating across borders.
Investment ties between the two countries are already significant. Canadian pension funds and institutional investors have invested heavily in India’s infrastructure and renewable energy sectors, while Indian firms have expanded their presence in Canada’s services economy. This existing investment corridor is seen as a stabilising factor in bilateral relations.
However, concerns remain over the need for a more predictable taxation and repatriation framework to sustain investor confidence. Balancing regulatory autonomy with investment security will be key to strengthening long-term economic engagement.
Verma also emphasised the importance of insulating trade agreements from political disruptions that have historically affected India-Canada relations. He argued that institutional mechanisms, including dispute resolution systems and regular review frameworks, are essential to ensure continuity in economic cooperation regardless of political developments.
The involvement of the private sector has also been identified as critical, with structured participation expected to provide stability during periods of diplomatic strain.
As negotiations resume, the evolving framework is expected to test whether economic cooperation can remain resilient even when political relations face uncertainty.
