India and Canada have agreed to first undertake a comprehensive review of their bilateral trade ties before formally resuming economic negotiations in 2026. The decision follows wide-ranging discussions held between Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney during the G7 Summit in Kananaskis in June 2025.
The two leaders reaffirmed their commitment to reinstating full diplomatic representation by appointing new high commissioners in Ottawa and New Delhi. This step is considered part of a phased approach to restore stability and rebuild trust in the bilateral relationship after nearly two years of diplomatic freeze initiated in late 2023 . Trade and economic dialogue had ground to a halt when Canada accused India of involvement in the murder of a Sikh separatist, leading to reciprocal expulsions of diplomats and the suspension of ongoing negotiations .
Amid renewed engagement, India and Canada plan to undertake a formal review of their existing trade and investment ties over the coming months. Authorities from both sides will examine bilateral trade flows, current market access issues, and sector‑specific opportunities such as in pharmaceuticals, critical minerals, clean energy, digital services, and agri‑food. Only after this review has been completed will they consider restarting talks on an interim trade deal—referred to as the Early Progress Trade Agreement (EPTA)—as a precursor to a full Comprehensive Economic Partnership Agreement (CEPA) in 2026 .
Economic ties between the two nations weathered the political storm and remained modestly strong during the diplomatic impasse. Bilateral merchandise trade rose slightly from US $8.3 billion in FY 2023 to $8.4 billion in FY 2024, despite the tensions. In FY 2024–25, India’s exports to Canada grew nearly 9.8 percent year‑on‑year to $4.2 billion, while imports from Canada declined by around 2 to $4.4 billion. Key Indian export categories include pharmaceuticals, garments, gems and jewellery, seafood, engineering goods, rice, and electrical equipment, while Canada supplies pulses, crude oil, fertilisers, aircraft, diamonds, and coal . Trade volumes in Canadian dollars reached CA$ 11.36 billion in 2024, up from CA$ 10.74 billion in 2023.
During the summit talks, Modi and Carney also agreed to deepen cooperation in emerging sectors such as clean energy, digital transformation, artificial intelligence, LNG, food security, higher education, mobility, and supply‑chain resilience. They underscored the need for a balanced partnership rooted in mutual respect, the rule of law, and sovereignty principles .
The commitment to conduct a structured trade evaluation reflects a more cautious and calibrated approach by both governments. They aim to avoid repeating the abrupt disruptions of 2023 by ensuring political and economic concerns are aligned before resuming formal negotiations. The timeline set for 2026 indicates that India and Canada are preparing for a thorough process, beginning with fact‑finding on trade performance and concluding with potentially renewed EPTA talks and eventual CEPA agreement.
In short, the restoration of diplomatic channels, the commissioning of a trade review, and the promise of resumed economic dialogue signal a deliberate reset of ties. The step‑by‑step roadmap highlights an understanding in both capitals that rebuilding trade momentum post‑crisis requires patience, pragmatism, and a shared vision for future collaboration.
