Business groups push Ottawa to finalize India trade deal after 12-year stall

For twelve years, a trade agreement between Canada and India has sat unfinished. Negotiations that began in 2010 under Stephen Harper's Conservative government have produced nothing concrete—until now, perhaps. This August, two major Canadian business organizations released a report arguing that the time to act has arrived, and that the economic case for a deal is overwhelming.

The Business Council of Canada and the Canada India Business Council commissioned analysis showing India as "one of Canada's largest untapped trade opportunities," a country whose economy resembles where China stood two decades ago. The numbers tell a striking story: while bilateral trade has grown at nearly 12 percent annually over the past twenty years, Canada has steadily lost market share. A comprehensive economic partnership agreement, the report argues, would reverse that trajectory. It would add $8.8 billion in annual two-way trade and boost Canada's GDP by 0.25 percent by 2035. For context, India currently ranks as Canada's thirteenth largest trading partner.

The stall has lasted long enough that it required a restart. In early 2022, after years of dormancy, Canada and India announced they were resuming talks. International Trade Minister Mary Ng traveled to India and met with her counterpart, Piyush Goyal. The two agreed to pursue an "early progress trade agreement"—a smaller, interim deal that would sidestep the thorniest issues while negotiations continue toward a full comprehensive agreement. Since that visit, the ministers have held monthly calls. According to a senior government official speaking anonymously, an early progress agreement is expected within months.

The timing reflects a larger geopolitical shift. Western nations, Canada among them, are working to deepen their economic and political footprint in Asia, partly as a counterweight to China. The federal government is preparing an "Indo-Pacific strategy"—the very term "Indo-Pacific" itself a deliberate choice, replacing the older "Asia-Pacific" to elevate India's profile in the region. Carleton University economist Vivek Dehejia notes that this rebranding is driven by Western anxiety about China's role. For Canada specifically, India's status as the world's fastest-growing major economy makes it an obvious target.

But the relationship is more complicated than economics alone. Dehejia points out that trade between the two countries remains modest compared to Canada's ties with other nations. The real driver, he argues, is the Indian diaspora—concentrated in places like the Greater Toronto Area—which represents a significant voting bloc. That political dimension gives the federal government incentive to claim a trade deal as a win. Prime Minister Justin Trudeau, in particular, has reason to want success; his 2018 visit to India became a public relations disaster when his family wore traditional Indian clothing and a convicted attempted murderer was invited to official events.

India itself has shifted its stance on trade. Historically protective of its markets, it has recently shown willingness to negotiate. The United Kingdom is expected to finalize a free-trade agreement with India this fall, and India has revived talks with the European Union. As Dehejia observes, India appears to have concluded that trade is too important to ignore. There is also incentive on the Indian side: a deal with Canada would signal that India is opening up, a message Modi's government wants to send.

Yet complications linger. India's government, under Prime Minister Narendra Modi, has faced sustained criticism for human rights violations. A Human Rights Watch report documented surveillance of critics, politically motivated prosecutions, harassment, online trolling, tax raids, and the suppression of activist groups. India has also refused to condemn Russia's invasion of Ukraine, citing long-standing diplomatic ties with Moscow and dependence on Russian weapons. In 2020, when Trudeau expressed support for protesting Indian farmers, India's government accused Canada of interference and warned of damage to bilateral relations.

Dehejia's counsel is pragmatic: successful negotiations require compartmentalizing social policy from trade policy. Both governments, he suggests, should use a trade agreement as a reset—a way to say that Canada-India relations are finally improving, that the two countries have moved past their friction. Whether that separation can hold remains an open question as negotiations move into their final phase.