India-Canada CEPA: After two failed attempts, can Modi-Carney reset deliver the $50 billion trade dream?

The India-Canada trade story has been one of missed opportunities. Negotiations launched in 2010 failed to deliver a pact, a second attempt collapsed amid political tensions in 2023, and now both countries are back at the table with a renewed push to seal the Comprehensive Economic Partnership Agreement (CEPA) by 2026. The latest talks mark a fresh beginning, but also a test of whether economic interests can finally overcome years of friction.

India and Canada have completed the third round of negotiations for the proposed CEPA, with both sides reporting progress across key areas and reiterating their ambition to conclude the agreement by the end of 2026.

The five-day talks held in Ottawa from July 6 to July 10 covered a wide range of issues, including trade in goods and services, intellectual property rights, rules of origin, sanitary and phytosanitary measures, and technical barriers to trade.

More from Business

The renewed momentum comes as both countries seek to transform a relationship that has significant economic potential but has historically struggled to move beyond political differences. The two sides have set an ambitious target of increasing bilateral trade to $50 billion by 2030 — more than double the current level.

However, reaching that goal will require more than signing a trade agreement. India and Canada will need to expand market access, improve supply chain integration and help businesses overcome long-standing barriers that have limited trade growth.

Third attempt at a trade pact

The current CEPA negotiations are the third attempt by India and Canada to build a comprehensive trade partnership.

The first round of talks began in 2010 but failed to achieve a breakthrough despite several years of discussions. The two countries revived negotiations in March 2022, but the process stalled in 2023 after diplomatic tensions between New Delhi and Ottawa following allegations surrounding the killing of Khalistani separatist Hardeep Singh Nijjar in Canada.

The relationship began improving after Mark Carney became Canada’s prime minister in March 2025, with both governments looking to rebuild engagement around economic cooperation.

In March 2026, India and Canada formally restarted CEPA negotiations after finalising the Terms of Reference for the agreement. Commerce and Industry Minister Piyush Goyal and Canada’s International Trade Minister Maninder Sidhu exchanged the framework in the presence of Prime Minister Narendra Modi and Prime Minister Carney.

The Terms of Reference provide the roadmap for negotiations, including the structure, frequency and approach of discussions, with the objective of achieving a balanced and mutually beneficial agreement.

The $50 billion challenge

The scale of ambition is significant. India-Canada bilateral trade stood at around $23.66 billion in 2024, including both goods and services.

However, merchandise trade remains relatively modest. During 2025-26, two-way goods trade declined 8.22 per cent to $7.95 billion from $8.66 billion in the previous year.

India’s exports to Canada rose to $4.67 billion in 2025-26 from $4.22 billion a year earlier, while imports declined to $3.28 billion from $4.44 billion.

The gap between current trade levels and the $50 billion target highlights the challenge facing negotiators. A successful CEPA would need to create new opportunities rather than simply reduce tariffs on existing trade.

Where India sees opportunities

Canada represents a market of more than 41 million people and has a purchasing power parity-adjusted GDP of around $2.34 trillion, making it an attractive destination for Indian exporters.

India’s key exports to Canada include pharmaceuticals, engineering goods, electronic products, seafood, chemicals, iron and steel products, garments, gems and jewellery.

The pharmaceutical sector is expected to be among the biggest beneficiaries if market access improves, given India’s position as one of the world’s largest suppliers of generic medicines.

Indian technology and services companies also see opportunities. Services exports, particularly in telecommunications, computer and information services and business services, form a major component of India’s economic engagement with Canada.

The presence of a large Indian-origin community and more than 4,25,000 Indian students in Canada also provides a strong foundation for deeper economic ties.

What Canada wants from India

For Ottawa, the agreement could open doors in one of the world’s fastest-growing major economies.

Canada has traditionally sought greater access for sectors such as agriculture, energy, minerals and natural resources. Its exports to India include pulses, fertilisers, coal, paper products, crude petroleum and other commodities.

Canadian businesses have also been looking for stronger investment protections and improved access to India’s services and manufacturing sectors.

The investment relationship is already significant. Canadian foreign direct investment in India stands at over $4 billion, while Canadian portfolio investments in Indian markets have crossed $75 billion.

Geopolitics meets economics

The push for CEPA comes at a time when both countries are reassessing their economic partnerships.

For India, expanding trade relationships with countries beyond traditional markets has become a priority amid rising protectionism globally. New Delhi has recently concluded or advanced several trade agreements, including pacts with the UK, EFTA, Oman, New Zealand and the European Union.

Canada, meanwhile, is looking to diversify trade relationships beyond its heavy dependence on the US market.

This creates a strategic opportunity for both sides. But the history of failed negotiations serves as a reminder that political alignment will remain crucial.

Can the reset deliver?

The latest round of negotiations has created optimism, but the difficult issues are yet to be resolved.

Trade agreements often involve complex negotiations over agriculture, intellectual property, investment rules and domestic regulations. The ability of both governments to maintain political momentum will determine whether CEPA crosses the finish line this time.

For India and Canada, the $50 billion trade ambition is not merely an economic target. It is a test of whether a relationship that has repeatedly been disrupted by political disagreements can finally move towards a stable and long-term partnership.

The third attempt may offer the strongest opportunity yet — but the real measure of success will be whether businesses on both sides can convert diplomatic progress into actual trade growth.