A Canada-India trade agreement may appear modest in aggregate volume, but it carries disproportionate strategic weight for Canada's diversification strategy and North American supply chain resilience — particularly in critical minerals, clean energy, and knowledge-intensive services, according to an analysis published in One World Outlook.

Where Bilateral Trade Stands Today

Bilateral commerce between the two nations has grown into a mid-sized but still underexploited relationship. In fiscal year 2023–24, India–Canada merchandise trade reached approximately $8.4 billion, edging up from $8.3 billion in 2022–23. Measured in calendar year terms, trade in goods and services stood at $18.38 billion in 2023 and climbed to roughly $23 billion in 2024 — a trajectory that underscores the rising weight of services in the overall relationship.

India draws pulses, fertilisers, newsprint, wood pulp, and industrial chemicals from Canada, creating concentrated dependencies in food security and input-intensive sectors. On the export side, India ships gems and jewellery, pharmaceutical products, readymade garments, organic chemicals, and light engineering goods to Canada — reflecting its role as a diversified manufacturing and processing hub rather than a simple commodity supplier.

Services: The Fastest-Growing Corridor

Services have emerged as the most dynamic pillar of the bilateral relationship, and where an Early Progress Trade Agreement (EPTA) or a Comprehensive Economic Partnership Agreement (CEPA) could deliver the highest value-added gains. Canada's services exports to India account for only about 1 per cent of its total services exports, while services imports from India have climbed to an estimated 3.5 per cent of Canada's total services imports — pointing to a rising Canadian reliance on Indian IT, professional, and back-office capabilities.

Canada's Strategic Case for an India Deal

For Ottawa, the strategic value of an India agreement lies less in raw trade volume and more in diversification — away from an overwhelming dependence on the United States and a fraught but still sizable relationship with China. Global Affairs Canada has explicitly identified India as a priority partner within its Indo-Pacific Strategy, with an ambition to double two-way trade with India by 2030.

Notably, this push comes at a time when Canada is actively recalibrating its trade architecture amid broader geopolitical shifts, making the India pivot both economically rational and politically strategic.

India's Energy and Minerals Demand as a Pull Factor

On the Indian side, sustained high growth and surging energy demand anchor the economic rationale for deeper engagement. Canada's Natural Resources Ministry has explicitly noted that India is expected to account for the largest growth in global energy demand through 2030, positioning it as a key long-term market for Canadian liquefied natural gas (LNG), crude oil, and other fuels.

India's rapid electrification drive, ambitious renewable energy targets, and an expanding middle class also generate demand for critical minerals, advanced manufacturing inputs, and aerospace technology — all areas where Canada holds competitive supply advantages.

The EPTA-CEPA Two-Step Architecture

Institutionally, New Delhi and Ottawa have converged on a two-step negotiating framework: a limited EPTA first, followed by a comprehensive CEPA. In March 2022, ministers formally agreed to re-launch CEPA negotiations while simultaneously pursuing an interim Early Progress Trade Agreement covering goods, services, investment, rules of origin, sanitary and phytosanitary (SPS) measures, technical barriers to trade, and dispute settlement. The pace and outcome of these negotiations will determine how quickly the relationship's latent potential is realised.