After years of tension, how India and Canada will reset ties after Modi-Carney meeting

Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney held their first formal bilateral meeting since relations between the two countries hit a historic low in 2023.

The meeting took place during the Group of Seven (G7) Summit hosted by Canada in Kananaskis, Alberta — an event that marked Modi’s first visit to the country in ten years.

This engagement came after nearly two years of diplomatic stagnation, sparked by accusations from then-Canadian Prime Minister Justin Trudeau implicating Indian authorities in the murder of Canadian Sikh separatist Hardeep Singh Nijjar.

India rejected the claims outright, and the fallout included reciprocal expulsions of diplomats, suspension of trade negotiations and a freeze in senior-level dialogues.

However, in contrast to the earlier hostility, Modi’s visit this time was met with a warm welcome by Carney, who stated, “It’s my great honour to have you here.”

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Both leaders, in separate public statements, described the meeting as “excellent” and “positive,” indicating a renewed willingness to rebuild what had become one of the most strained bilateral relationships among major democracies.

How India-Canada are resetting ties

The high-level talks between Modi and Carney focused on a systematic plan to restore stability and trust between New Delhi and Ottawa.

According to official readouts, one of the earliest steps agreed upon was to appoint new High Commissioners to each other’s capitals — a key diplomatic gesture given that both countries had withdrawn their top envoys during the peak of the dispute in 2023–2024.

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Foreign Secretary Vikram Misri confirmed that both leaders had a “very positive and constructive” discussion, which highlighted shared democratic values, people-to-people connections, and mutual economic interests.

“The Prime Ministers agreed to take calibrated steps to restore stability to this very important relationship,” Misri said.

A major diplomatic breakthrough was the mutual commitment to resume senior-level mechanisms for dialogue across multiple sectors — particularly trade, education, mobility and infrastructure.

The leaders instructed their respective officials to revive the trade negotiations that had been paused during the diplomatic impasse.

The Canadian Prime Minister’s Office said that both leaders “reaffirmed the importance of Canada-India ties, based upon mutual respect, the rule of law, and a commitment to the principle of sovereignty and territorial integrity,” and that they would “return to regular services to citizens and businesses in both countries.”

Why India-Canada ties were damaged

The shift in diplomatic tone comes after a period of intense strain that began in September 2023 when Trudeau publicly accused Indian government agents of being involved in Nijjar’s murder outside a gurdwara in Surrey, British Columbia.

Nijjar, who was leading the Khalistan Tiger Force — a banned terror group in India — had been labelled a fugitive terrorist by New Delhi.

India rejected the allegations, calling them “absurd,” and instead pointed fingers at Canada for sheltering extremist elements hostile to Indian sovereignty.

The backlash was swift: Canada expelled six Indian diplomats, and India responded by removing its acting High Commissioner and five other officials.

Relations further worsened in October 2024 when Canadian authorities accused India’s then High Commissioner Sanjay Kumar Verma and five of his colleagues of involvement in the incident.

When Canadian authorities sought to question the Indian diplomats and asked New Delhi to waive their diplomatic immunity, the Indian government refused and pulled out its diplomatic team entirely.

The Royal Canadian Mounted Police had, by October 14, 2024, publicly accused Indian agents of orchestrating criminal operations in Canada.

Contradicting Trudeau’s accusations, a January Canadian commission report also concluded that there was “no definitive link” to a “foreign state” in the killing of Hardeep Singh Nijjar.

Public reaction to Modi’s 2025 visit to Canada was mixed. A few dozen protesters, including members of pro-Khalistan groups, staged demonstrations in Calgary, tearing Indian flags and expressing outrage over Modi’s presence.

Despite this opposition, Carney, who took charge in April, stood by his decision to invite Modi to the G7 Summit, pointing out India’s importance in addressing issues such as energy security, artificial intelligence, and counterterrorism.

“India has been coming to the G7 since 2019 and it’s a testament to the importance of your country, to your leadership, and to the importance that we look to tackle together,” Carney said before the bilateral exchange.

How India-Canada are still linked together

India and Canada are among each other’s significant trading and investment partners, and both sides have now agreed to reinvigorate economic engagement. In 2023, India exported goods worth USD 7.53 billion to Canada, while Canadian exports stood at CAD 5.12 billion.

Bilateral merchandise trade reached CAD 12.65 billion. For 2024 (January–August), trade in goods stood at CAD 8.55 billion, with India’s exports at CAD 5.22 billion and imports at CAD 3.33 billion.

Service sector exchange was also substantial, with bilateral trade in services amounting to CAD 13.49 billion in 2023 (India’s exports: CAD 3.36 billion; imports: CAD 10.13 billion). From January to June 2024, bilateral services trade reached CAD 7.85 billion.

Canada has been a strong investment partner for India. Canadian pension funds have invested more than CAD 75 billion in the Indian economy, reflecting deep financial confidence.

Over 600 Canadian firms have an established presence in India, while more than 1,000 are exploring business in the Indian market. Meanwhile, Indian companies operating in Canada are engaged in IT, banking, natural resources, pulp and fibre, health sciences and financial services.

India’s major exports to Canada include pharmaceuticals, electronics, jewellery, engineering goods, seafood, and auto components. On the import side, India sources minerals, pulses, potash, newsprint, aluminium and iron scrap, industrial chemicals and gemstones from Canada.

The two leaders also discussed future collaboration in areas such as clean energy transition, AI development, digital infrastructure, food and fertilizer security and critical mineral supply chains.

Canada is home to an estimated 1.8 million persons of Indian origin and nearly 1 million non-resident Indians — altogether accounting for more than 3 per cent of Canada’s population.

According to latest estimates, over 427,000 Indian students are currently enrolled in Canadian educational institutions, making India the largest source of international students in the country.

This large diaspora has traditionally acted as a bridge between the two nations. However, concerns remain in India over the presence of separatist elements operating on Canadian soil.

New Delhi has repeatedly urged Ottawa to act on its long-pending extradition requests for individuals involved in terrorism-related charges, including Lakhbir Singh Landa, Gurjinder Singh, Gurpreet Singh, Gurjeet Singh and Arshdeep Singh Gill.

Modi’s meeting with Carney is expected to reopen such discussions, even if they remain politically sensitive in Canada.

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With inputs from agencies