Prime Minister Mark Carney is heading to India with trade on his mind.
With stops in Mumbai and New Delhi, Carney is looking to cement stronger trade ties with India, one of the world’s fastest-growing economies. Both countries are looking to diversify trade partnerships and have signalled a willingness to turn a new leaf in a relationship marred with recent geopolitical tensions.
Both countries have a two-way trade relationship worth $30.8 billion, according to a statement from Carney’s office. At last year’s G7 summit in Alberta, Carney and his Indian counterpart, Narendra Modi, agreed to more than double that figure to $70 billion by 2030 by signing a Comprehensive Economic Partnership Agreement.
Here’s where Canada and India are aiming to collaborate, and what they might gain from each other:
Energy
Canada is planning to increase exports of crude oil and natural gas to India while buying refined petroleum products in return as both nations eye closer trade ties.
Currently, 97 per cent of all of Canada’s energy exports go to the United States. Carney has vowed to double non-U.S. exports over the next decade. India, too, is looking to reduce its reliance on Russian oil.
“There’s this pressure on India to diversify away from Russian crude and pressure on Canada to develop markets other than the U.S. for its oil products,” said Partha Mohanram, director of the University of Toronto’s India Innovation Institute.
India is the world’s third-largest consumer of oil, fourth-largest liquified natural gas (LNG) importer and third-largest liquid petroleum gas (LPG) consumer.
Canada is looking to export more LNG and crude oil to Asian markets via the expanded Trans Mountain Pipeline, and has signed a memorandum of understanding with Alberta that includes a potential new pipeline to B.C.’s coast.
Currently, most of Canada’s energy trade with India rests on the export of bituminous coal, with some crude oil exports.
Canada’s total energy exports to India amounted to $761.5 million in 2024, while Canada imported $206 million worth of energy products, according to Statistics Canada.
Most of Canada’s energy exports to India were made up of $602 million in coal exports and $158 million in crude oil and bitumen, with a fairly small amount of nuclear fuel being exchanged between the two countries.
In 2024, India sold $206 million worth of refined petroleum energy products to Canada.
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“India has a tremendous amount of demand and need for both clean and conventional energy, and Canada is a major producer,” said Vina Nadjibulla, vice-president of research and strategy at the Asia-Pacific Foundation of Canada.
“Until recently, Canada didn’t have the export infrastructure to get its oil and gas to Asia, but now it does. And I think we’ll increasingly see more such opportunities.”
In 2023-24, the country imported nearly 88 per cent of all the crude oil it consumed — most of it from Russia. Nearly half (47.1 per cent) of India’s natural gas was also imported.
For Canada, this signals an opportunity, International Trade Minister Maninder Sidhu said in Davos, Switzerland, last month.
Sidhu said India is “destined to be the third-largest economy in the world” and is the next major target in Carney’s push to diversify trade.
“India is requiring 70 per cent more energy by 2040. As you know, Canada has the energy. India’s year-over-year growth is about seven per cent, so they need food, they need energy. We have that,” Sidhu said while attending the World Economic Forum with Carney.
Agriculture
Saskatchewan Premier Scott Moe, who is part of the Canadian trade mission to India, said a new trade deal would be “a real positive” for both the nation and the province.
Last year, India imposed a 30 per cent tariff on Canadian yellow peas, dealing a major blow to Saskatchewan’s agriculture industry.
But the trade relationship has tremendous potential to grow, Nadjibulla said.
“India is a major export (destination) for Canadian agricultural products like pulses, potash, lentils,” she said.
While India has an overall trade surplus when it comes to agriculture, there are opportunities in the country’s $48.5 billion annual food import sector.
According to Statistics Canada, India’s largest food imports were palm oil, soya-bean oil, and sunflower oil, “all products for which the proportion supplied by Canada was negligible or non-existent.”
In 2022, Canada supplied only 0.1 per cent of processed food and beverages to India’s foreign supply.
Defence
India is the largest defence importer in the world, but it aims to diversify its defence trade ties, Mohanram said.
“India has shown that it’s willing to diversify its defence needs. They have (defence) relationships with both the U.S. and Russia at the same time,” he said.
Both India and Canada have increased defence spending as a way to reduce their reliance on the United States, Nadjibulla said.
“Defence industrial cooperation can be the entry point (for a new relationship), precisely because Canada now has for the first time a defence industrial strategy, and both India and Canada are investing a lot more in their defence sectors,” she said.
While Canada has “niche technologies” to offer to India, such as in the field of maritime domain awareness, it will take a long time for the two countries to build trust after recent geopolitical tensions, experts said.
In September 2023, then-prime minister Justin Trudeau accused the Indian government of being involved in the killing of Canadian citizen and Sikh leader Hardeep Singh Nijjar on Canadian soil.
The incident soured relations, which Carney has sought to refresh amid reports by Global News that Indian transnational repression targeting Sikh Canadians is continuing.
“For this sector to move forward, there’s a need for rebuilding of strategic trust and it will take time,” Nadjibulla said.
“There’s a history there, and that’s going to take time to overcome.”
Science, technology and investment
Carney has said that conversations around AI and technology will be part of the broader trade discussions.
This may happen through the existing relationships between universities in both countries, Nadjibulla said.
The University of Waterloo on Thursday announced an AI partnership with Indian tech giant Tata Consultancy Services “to strengthen the leadership, research and talent systems needed to compete responsibly in a global AI economy.”
India’s robust pharmaceutical sector also sees a potential market in Canada, Nadjibulla said.
“Canada does buy Indian pharmaceutical products. And there is also interest in life sciences cooperation, which is why the premier of New Brunswick is on the delegation. That’s because New Brunswick is interested in some of those research partnerships,” she said.
India will also look to attract more institutional Canadian investors like the Canada Pension Plan, Mohanram said.
“Canada has continued to be a big provider of foreign direct investment in India. That I think will continue. (Canadian investors could be) making large investments in India, directly in infrastructure projects and in Indian capital markets,” he said.
The trip comes as Carney makes his pitch for a “new world order” and India will be an important piece in that approach, Nadjibulla said.
“India has to be a part of the puzzle. This trip is an opportunity for Prime Minister Carney to take his middle power diplomacy to Asia, to the developing world,” she said.
“In some ways, India is a bridging power. It bridges the global north and global south.”
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