India, Canada Move to Reset Trade Ties as Talks Begin on Framework for Free Trade Agreement

India and Canada are preparing to take a formal step towards rebuilding their trade relationship, with discussions set to begin on the Terms of Reference (ToR) for a proposed free trade agreement. Union Commerce and Industry Minister Piyush Goyal said the move would mark the resumption of structured engagement between the two countries after negotiations were paused in 2023 amid diplomatic tensions.

The ToR talks will determine the scope, objectives and negotiating architecture of the proposed pact, effectively laying the groundwork for future negotiations. Officials see this as the first concrete step towards reviving a broader trade dialogue and identifying priority sectors and areas of mutual interest. According to Goyal, both sides are keen to re-engage formally and build a foundation that can support deeper economic cooperation.

The renewed momentum follows a recent thaw in bilateral relations. Last month, India and Canada agreed in principle to restart stalled trade discussions after a meeting between Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney on the sidelines of the G20 summit in Johannesburg. The two leaders subsequently announced plans to launch negotiations for a high-ambition Comprehensive Economic Partnership Agreement (CEPA), with an ambitious target of doubling bilateral trade to USD 50 billion by 2030.

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Carney has publicly underscored India’s importance to Canada’s trade diversification strategy, particularly as Ottawa seeks to reduce its reliance on the US market. He has committed to doubling Canada’s non-US exports over the next decade and described India as a reliable trading partner, while acknowledging that areas of friction remain. A formal trade agreement, he said, would provide clearer rules, stronger protections for businesses and credible dispute-resolution mechanisms.

Despite diplomatic strains in recent years, trade flows between the two countries have continued to grow, though from a relatively modest base. Two-way goods and services trade reached around C$31 billion in 2024, heavily skewed in Canada’s favour due to strong services exports. Analysts note that this remains small compared with India’s overall trade volumes, underlining the untapped potential of the relationship.

Beyond trade, both sides have reaffirmed cooperation in areas such as civil nuclear energy, including discussions on long-term uranium supply arrangements. Together, these developments signal a cautious but clear effort by New Delhi and Ottawa to reset ties and explore a more stable and expansive economic partnership.