Canada and India are two democracies with shared values, complementary economies, and a long-standing history of people-to-people ties. As India continues its ascent as a global economic powerhouse and Canada seeks to diversify its trade beyond traditional partners like the U.S. and EU, the bilateral relationship is gaining strategic urgency. In FY2024, total merchandise trade between the two countries reached US$8.37 billion, reflecting resilience despite diplomatic turbulence and global economic headwinds.
This report explores the full scope of Canada–India trade relations, including tariff dynamics, trade volumes, institutional frameworks, sectoral trends, five-year industry performance, and a historical overview of their economic engagement.
Tariff and Non-Tariff Challenges
India’s tariff regime remains among the highest in the G20, particularly in agriculture and processed goods. Canadian lentils and pulses, for example, faced tariffs of up to 30% between 2017 and 2022. These were lifted in 2023, resulting in a 72% surge in Canadian pulse exports to India. Canola oil and feed grains continue to face variable tariffs and phytosanitary restrictions, while dairy and processed foods are subject to complex licensing and labeling requirements.
Canada, by contrast, maintains relatively low and predictable tariffs. However, Indian exporters face regulatory hurdles in pharmaceuticals, electronics, and textiles due to Canada’s stringent health and safety standards.
Efforts to harmonize these barriers were underway through the Comprehensive Economic Partnership Agreement (CEPA), though negotiations were suspended in 2023 following diplomatic tensions.
Trade Performance and Investment Channels
In FY2024, Canada exported approximately US$3.87 billion in goods to India, while importing US$3.84 billion, resulting in a near-balanced trade relationship. Canadian exports were led by lentils and pulses (over US$1.38 billion), mineral fuels (US$562 million), pulp and wastepaper (US$378 million), fertilizers (US$307 million), and iron and steel (US$170 million).
India’s exports to Canada were dominated by pharmaceuticals (US$434 million), machinery and nuclear equipment (US$309 million), electrical goods (US$219 million), jewelry and precious stones (US$143 million), and iron and steel articles (US$183 million).
On the investment side, Canadian pension funds such as CPP Investments and CDPQ have increased their exposure to India to over CAD 13 billion, focusing on infrastructure, logistics, and renewable energy. Indian firms like Infosys, TCS, and Wipro have expanded operations in Canada, employing thousands in IT and consulting roles.
Diplomatic Milestones and Tensions
- 1950s–1970s: Canada provided significant development aid to India under the Colombo Plan. Relations soured after India’s 1974 nuclear test, which used Canadian-supplied technology.
- 1990s: India’s economic liberalization rekindled Canadian interest. Trade and investment began to grow steadily.
- 2010: The Nuclear Cooperation Agreement was signed, allowing Canadian uranium exports to India.
- 2018–2022: CEPA negotiations advanced, and sectoral cooperation expanded in clean energy and education.
- 2023: Diplomatic tensions over political interference allegations led to a freeze in CEPA talks and the expulsion of diplomats.
- 2025: High-level dialogue resumed, with both sides expressing interest in restoring economic momentum.
Sector Deep Dives
Agriculture and Food Security
Canada remains a vital supplier for India’s protein needs. Following the lifting of tariffs in 2023, India imported over 1.2 million tonnes of Canadian lentils in 2024—a 92% increase from 2022. Future growth may rely on collaboration in agri-inputs, cold storage, and climate-adaptive seed technology.
Energy and Sustainability
India’s renewables roadmap—500 GW of non-fossil capacity by 2030—requires US$240 billion in external investment. Brookfield, Northland Power, and other Canadian clean energy giants have committed over US$1.5 billion to Indian projects since 2020.
Tech and Digital Services
Canada’s AI leadership is increasingly relevant to Indian data-driven industries. Bilateral cooperation in fintech, cyber security, and cloud infrastructure is expected to grow, with new corridors forming between Toronto and Bengaluru, and Vancouver and Hyderabad.
Education and Talent
With over 320,000 Indian students, Canada is the number-one destination for Indian higher education migration. Indian students alone generate more than US$6 billion in tuition and local economic activity. Joint research initiatives between Canadian universities and top Indian institutes (such as IITs and IISc) have expanded into robotics, clean tech, and AI ethics.
Diaspora and Soft Power Influence
Canada’s Indo-Canadian diaspora is one of the largest globally and exerts growing political and economic influence. Indo-Canadian MPs, mayors, and entrepreneurs play a critical role in maintaining continuity during political cycles.
Beyond formal diplomacy, diaspora organizations such as the Canada India Foundation, Punjabi Chamber of Commerce, and Canada India Business Council are central to SME engagement and state-level partnerships.
Recommendations and Roadmap
- Reinstate High Commissioners and full diplomatic dialogue by mid-2025, laying the groundwork for trade normalization.
- Re-engage in CEPA with a focus on phase-wise agreements—starting with digital trade, agriculture, and investment protection.
- Establish a Canada–India Innovation Dialogue focusing on green energy, fintech, and food systems.
- Launch a Joint Strategic Plan 2035, providing a 10-year roadmap for trade, technology, education, and public health cooperation.
- Double annual bilateral trade to US$16 billion by 2030, with benchmarks by sector and state-level partnerships.
Five-Year Industry Trade Trends (2019–2024)
- Agriculture and Agri-Food: Grew from US$1.12 billion in 2019 to US$1.38 billion in 2024, with a dip in 2021 due to tariffs and a rebound in 2023–2024.
- Fuels and Energy: Rose from US$410 million in 2019 to US$562 million in 2024, driven by India’s energy diversification.
- Pulp and Forestry: Increased from US$295 million in 2020 to US$378 million in 2024, reflecting India’s packaging and hygiene sector growth.
- Fertilizers and Chemicals: Climbed from US$198 million in 2019 to US$307 million in 2024, as India sought stable fertilizer sources amid global disruptions.
- Pharmaceuticals (India to Canada): Jumped from US$312 million in 2019 to US$434 million in 2024, driven by demand for generics and vaccines.
- Machinery and Electronics (India to Canada): Rose from US$241 million in 2019 to over US$528 million in 2024, reflecting India’s growing industrial exports.
- Jewelry and Precious Stones: Increased from US$98 million in 2019 to US$143 million in 2024, supported by diaspora demand and seasonal trends.
Historical Overview of Canada–India Trade Relations
The roots of Canada–India trade stretch back to the 19th century, when both countries were part of the British Empire. Early trade was limited and largely symbolic, involving small-scale exports of Canadian wheat and lumber to British-controlled ports in India.
After India’s independence in 1947, Canada was among the first Western nations to establish diplomatic relations. The 1950s and 1960s saw Canada emerge as a major development partner under the Colombo Plan, providing aid, technical expertise, and educational exchanges. Canadian wheat and dairy products were exported to India under food security programs, while Indian textiles and handicrafts began entering Canadian markets.
The relationship soured in 1974 when India used a Canadian-supplied nuclear reactor to conduct its first nuclear test. Canada suspended nuclear cooperation and imposed sanctions, which remained in place until the early 2000s.
India’s economic liberalization in the 1990s reignited Canadian interest. Trade missions, business forums, and academic exchanges flourished. The signing of the Nuclear Cooperation Agreement in 2010 marked a turning point, allowing Canadian uranium exports to India and restoring trust.
The 2010s saw rapid growth in trade, investment, and migration. However, tensions resurfaced in 2023 over political and security concerns, leading to a temporary freeze in negotiations and diplomatic downgrades.
Despite these ups and downs, the long arc of Canada–India trade has been one of gradual deepening. Today, both countries are poised to build on this legacy—if they can align their strategic priorities and institutional frameworks for the future.