Canada-India Economic Relations: Trade and Partnership Growth

Canada and India have built one of the most consequential economic relationships in the Indo-Pacific – and it’s growing fast. What began as a partnership rooted in shared Commonwealth values and diplomatic goodwill has evolved into a multi-billion dollar trade corridor spanning goods, services, energy, and investment. In 2024, India ranked as Canada’s seventh-largest goods and services trading partner, with two-way trade reaching CAD $30.8 billion. That number alone tells a compelling story – but the details behind it reveal just how deeply intertwined these two economies have become.

A relationship built over decades 🔗

India and Canada established formal diplomatic ties in 1947, the same year India gained independence. For much of the 20th century, the relationship was cordial but modest in economic terms. The real shift came after India’s economic liberalization in the 1990s, which opened up markets and attracted foreign attention. Canada was quick to respond. In October 1994, a Canadian ministerial delegation visited India and openly described it as one of the most promising markets in the Asia-Pacific region for Canadian business. Trade missions followed, deals were signed, and the foundation for a modern commercial relationship was laid.

By 2018, the bilateral relationship was formally elevated to a Strategic Partnership, structured around ministerial dialogues on foreign policy, trade and investment, finance, and energy. That institutional framework gave the economic relationship a stable backbone – even as political tensions occasionally tested the ties between the two governments.

The scale of bilateral trade today 🔗

The sheer volume of trade between Canada and India is substantial and growing. In 2024, two-way merchandise trade reached CAD $13.3 billion, with Canadian exports totaling $5.3 billion and imports from India amounting to $8.0 billion. India maintained a goods trade surplus, reflecting the strength and diversity of its manufacturing and export base.

But merchandise trade is only part of the picture. When services are factored in, the numbers look even more striking. Canada exported $16.1 billion worth of services to India in 2024 – up from just over $1 billion a decade earlier – making India the third-largest destination for Canadian services exports, behind only the United States and the European Union. On the other side, service imports from India totaled $4.3 billion, reflecting India’s globally competitive services sector.

What Canada exports to India 🔗

Canada’s export profile to India reflects its natural resource wealth and agricultural strength. Canadian exports are led by vegetables, mineral fuels and oils, and wood pulp. Lentils are a standout – Canada is India’s primary source, with around 53% of India’s lentil imports coming from Canada in 2023, according to Export Development Canada. Potash fertilizers are another major category, given India’s vast agricultural sector and its dependence on imported inputs to sustain crop yields.

Energy exports, particularly coal, have also been significant, though this is shifting. Coal exports to India peaked in 2022 and have since declined, partly due to Canada’s commitment to phase out thermal coal exports by 2030 and India’s plans to expand domestic production. In 2024, a notable new chapter opened when Indian energy company Reliance Industries purchased 2 million barrels of Canadian crude – the first shipment from the Trans Mountain pipeline – signaling potential growth in oil trade as the pipeline reaches full capacity.

What India exports to Canada 🔗

India’s exports to Canada are dominated by manufactured and value-added goods. Merchandise imports from India primarily consist of pharmaceutical products, machinery and equipment, and electronics. India’s pharmaceutical industry – one of the world’s largest – supplies generic medicines and active pharmaceutical ingredients to Canadian distributors and healthcare providers. Beyond pharma, India exports jewelry and precious stones, textiles and clothing, and a growing range of technology products.

India’s services exports to Canada are also expanding. Service imports from India grew 9.3% in 2024, with strengths in telecommunications, business process management, and informatics – sectors where India has long held a global competitive edge.

Investment ties: deep and growing deeper 🔗

Trade in goods and services is matched by significant capital flows in both directions. Portfolio investments from Canada into India stand at more than CAD $100 billion, underscoring how attractive Indian markets have become for Canadian institutional investors. Canadian pension funds – among the world’s largest – have been particularly active in India’s infrastructure, logistics, and financial services sectors, drawn by the country’s sustained high growth rates.

On the foreign direct investment (FDI) side, cumulative FDI equity inflows from Canada to India from April 2000 to March 2025 amount to US $4.17 billion, with Canada ranking as the 17th largest foreign investor in India as of March 2024. More than 600 Canadian companies have an established presence in India, and over 1,000 are actively pursuing opportunities in the Indian market. Indian companies, meanwhile, are active in Canada across sectors including IT, banking, natural resources, and health sciences.

Services trade: the education angle 🔗

One of the more distinctive drivers of Canada’s services export boom to India is education. Canada’s education-related travel exports tripled since 2018, reaching $36 billion in 2024, with Indian students accounting for the largest share. India is Canada’s largest source country for international students, with 392,810 study permit holders with Indian citizenship recorded in 2024. The spending of these students on tuition, housing, and living costs flows directly into Canada’s services export statistics, making education a surprisingly large pillar of the bilateral economic relationship.

This people-to-people connection also reinforces broader economic ties. More than 1.8 million Canadians of Indian origin form a significant diaspora community that facilitates business networks, investment flows, and cultural exchange between the two countries.

The CEPA: a landmark agreement in the making 🔗

For years, both governments have discussed a Comprehensive Economic Partnership Agreement (CEPA) to formalize and expand the trade relationship. Those talks stalled at various points, including during a period of serious diplomatic tension following the 2023 assassination of a Canadian citizen in British Columbia and subsequent allegations of Indian government involvement. However, by 2025, both sides moved decisively to reset the relationship.

In March 2026, Canadian Prime Minister Mark Carney visited India and met with Prime Minister Narendra Modi. The two leaders confirmed that Canada and India will conclude a CEPA, following the finalization of Terms of Reference by chief negotiators. The agreement is designed to support Canada’s goal of more than doubling two-way trade to $70 billion by 2030. Economic modelling suggests a completed CEPA could boost bilateral trade by US $4.4 to $6.5 billion and deliver a GDP gain of US $3.8 to $5.9 billion for Canada by 2035, according to the India Brand Equity Foundation.

Energy and critical minerals: the next frontier 🔗

Beyond trade in traditional goods, both countries are actively building a new energy partnership. During the 2026 summit, Canada and India announced a new Strategic Energy Partnership covering LNG, LPG, uranium, solar, and hydrogen. A landmark agreement between the Government of India and Saskatoon-based Cameco to supply nearly 22 million pounds of uranium to India for nuclear energy generation from 2027 to 2035 was one of the headline outcomes.

Critical minerals are another area of growing collaboration. India is seeking secure access to critical minerals for its manufacturing and clean technology ambitions, and Canada – rich in lithium, cobalt, nickel, and rare earth elements – is well positioned to be a reliable supplier. Both countries also restarted the Canada-India Ministerial Energy Dialogue (CIMED) in 2026, with a focus on diversified energy supplies and clean technology cooperation, including hydrogen production and carbon capture.

Sectors with strong growth potential 🔗

Several sectors stand out as particularly promising for deeper economic engagement. Canadian companies have a comparative advantage in AI and digital services, cleantech focused on water treatment and emissions control, and agri-food and agricultural technologies. India’s rapidly expanding middle class, urbanization, and digital economy make it an especially receptive market for these offerings. Canada’s academic institutions and research ecosystem also create opportunities for joint innovation partnerships in health, clean technology, and digital infrastructure.

On India’s side, its pharmaceutical sector, IT services, and growing manufacturing base continue to make it a competitive exporter. The Production Linked Incentive (PLI) scheme introduced by the Indian government in 2020 provides incentives across 14 sectors including pharmaceuticals, telecommunications, and advanced batteries – sectors directly relevant to Canadian import interests and investment decisions.

A relationship tested but resilient 🔗

It would be incomplete to discuss Canada-India economic relations without acknowledging the diplomatic turbulence of 2023 and 2024. Serious allegations surrounding the killing of a Canadian Sikh activist led to mutual diplomat expulsions and a sharp cooling of government-to-government relations. Yet what is notable from an economic standpoint is that trade between the two nations remained relatively stable and largely free of punitive restrictions throughout the diplomatic standoff. Business ties, investment flows, and student mobility continued largely uninterrupted.

By mid-2025, diplomatic relations were formally restored. At the G7 Summit in Kananaskis, Alberta, Prime Ministers Carney and Modi reaffirmed bilateral ties, with both leaders emphasizing shared goals in clean energy, AI, and counterterrorism. The economic relationship – built on complementary strengths and deep people-to-people connections – proved more durable than the political friction that surrounded it.

What do you think? As Canada works to diversify its trade away from heavy dependence on the United States, how significant is the India partnership likely to become – and what sectors do you think hold the most untapped potential for both countries? Given that the education and student mobility flow has become one of the largest single drivers of Canada’s services exports to India, what does that suggest about the intersection of immigration policy and trade policy in shaping economic relationships?

References

1. https://www.pm.gc.ca/en/news/news-releases/2026/02/23/prime-minister-carney-diversify-canadas-trade-attract-new-investment
2. https://en.wikipedia.org/wiki/Canada%E2%80%93India_relations
3. https://www.international.gc.ca/country-pays/india-inde/relations.aspx?lang=eng
4. https://www.edc.ca/en/article/canada-india-services-exports.html
5. https://www.edc.ca/en/article/doing-business-india-importing-exporting.html
6. https://www.signal49.ca/insights/trade-partner-profile-india/
7. https://www.cgivancouver.gov.in/pages/NjI,
8. https://www.ibef.org/indian-exports/india-canada-trade
9. https://www.pm.gc.ca/en/news/news-releases/2026/03/02/prime-minister-carney-secures-ambitious-new-partnership-india-focused