Indo-Canadian ties under Carney: Is it a new beginning?

Prime Minister Narendra Modi is all set to visit Canada for the G7 Summit in Kananaskis, Alberta, from June 15 to 17, 2025. Canadian Prime Minister Mark Carney was recently asked by the media why he had invited India’s Prime Minister for the G7 Summit, given the strained relationship between the two countries.

In a brief reply, Carney said: “There are certain countries that should be at the table for those discussions in my capacity as G7 chair consultation.” He added, “India is the fifth largest economy in the world, effectively the most populous in the world, central to a number of supply chains, so it makes sense. And in addition, bilaterally, we have now agreed importantly to continued law enforcement dialogue so there’s been some progress. I extended the invitation to Prime Minister Modi in that context and he has accepted.”

India-Canada relations had sunk to the rock bottom because Justin Trudeau had allowed a wide range of anti-India activities to be carried out by extremist Sikhs who constituted his vote bank. It was clear that as long as Justin Trudeau remained in power, there would be no hope for the improvement of India-Canada relations. It was felt that if was ousted from the prime ministership, Indo-Canadian relations stood some chance of improving.

Mark Carney replaced Justin Trudeau as Prime Minister in March 2025 in what is hoped could be a turning point in Canada’s relations with India. He assumed office at a time Canada was in the midst of an escalating trade war with the US and existential threats from President Donald Trump.

During a media interaction in Calgary a few days before being sworn in as Prime Minister, Carney had said: “What Canada will be looking to do is to diversify our trade relationship with like-minded countries. And there are opportunities to rebuild the relationship with India. There needs to be a shared sense of values around that commercial relationship. If I’m Prime Minister, I look forward to the opportunity to build that.”

Striking a conciliatory tone, India also said that it hopes to rebuild ties with Canada based on “mutual trust and sensitivity” and blamed the downturn in bilateral relations to the “licence that was given to extremist and secessionist elements” in Canada.

In a notable step toward repairing the bilateral relationship, India’s External Affairs Minister S. Jaishankar recently held a phone conversation with Canada’s new Foreign Minister Anita Anand on May 26, 2025. They focused on deepening the bilateral economic ties and advancing shared priorities. Their dialogue, the first of its kind following the recent shift in Canada’s political leadership, is a promising sign of renewed engagement between two countries that have long shared educational, economic, and cultural bonds. Anand said that the discussion was productive, adding that she looked forward to “continuing our work together”.

The Jaishankar-Anand conversation is more than a political formality—it’s a strong signal to students, families, universities, and businesses that India and Canada are ready to turn the page under Mark Carney’s leadership. Ottawa and New Delhi can gain significantly by working together to address shared challenges in today’s shifting global order. For this, both countries need to work closely in order to move past the diplomatic turbulence of recent years. The invitation extended by Carney to Prime Minister Modi is a further signal by Canada of its willingness to work in that direction.

It is hoped that this fresh engagement under Canada’s new Prime Minister signals a strong intention to stabilise ties, restart cooperation, and rebuild trust between the two nations. India and Canada are both influential members of the Commonwealth, G20, and active voices in international affairs. Restoring strong bilateral ties can have a ripple effect over several areas such as the Comprehensive Economic Partnership Agreement (CEPA), collaboration on clean energy, climate finance, and technology startups, education and stronger people-to-people ties.

There have been suggestions by political analysts in Canada for quite some time that it must end tensions and instead find constructive ways to strengthen the partnership and diversify trade with India, which is a rising power and is set to play an increasingly influential role in the evolving geopolitical and global economic landscape.

However, this is easier said than done because there is a long-standing and deep-seated mistrust between India and Canada, fuelled by a number of factors, including the 1985 Air India bombing tragedy in which 329 people were killed, mostly Canadians of Indian origin. India’s view is that Canada failed to prevent the attack, mishandled the investigation, and responded with insufficient empathy and accountability. Disagreements over the Sikh separatist Khalistan movement have also contributed to the tensions, particularly with Prime Minister Trudeau’s perceived support for the movement.

The relationship deteriorated sharply in September 2023 when Justin Trudeau said in a speech before the House of Commons that “Canadian security agencies have been actively pursuing credible allegations of a potential link between agents of the Government of India and the killing of a Canadian citizen, Hardeep Singh Nijjar”. Trudeau also said :“Any involvement of a foreign government in the killing of a Canadian citizen on Canadian soil is an unacceptable violation of our sovereignty. It is contrary to the fundamental rules by which free, open and democratic societies conduct themselves”.

Some Canadian politicians, including Justin Trudeau have been criticized for appearing at Sikh diaspora events where those who advocate violence are celebrated. This has further fuelled a deep-seated skepticism among Indian policymakers about Canada’s commitment to combating violent extremism. The allegations by Canada that the Indian government was involved in the assassination of Hardeep Singh Nijjar, a prominent Khalistani leader, have further escalated the diplomatic row. This distrust extends to both sides, with India accusing Canada of sheltering and supporting anti-India terrorists, while Canada accuses India of interfering in Canadian affairs.

The downturn in bilateral relations was swift. Both countries expelled members of each other’s diplomatic staff and advised their citizens against traveling to the other. In the midst of escalating tensions, Canada closed three consulates in India. The crisis further deepened  a year later when Ottawa accused Indian diplomats of being complicit in criminal activities, including intimidation, extortion, and murder. New Delhi rejected these claims, labelling Canada a “safe haven” for extremism and anti-India activities. India withdrew its High Commissioner from Canada and  some other diplomats, saying “We have no faith in the current Canadian Government’s commitment to ensure their security. Therefore, the Government of India has decided to withdraw the High Commissioner and other targeted diplomats and officials”. India also expelled six Canadian diplomats.

From India’s point of view, the most significant challenge in Canada-India relations stems from what it perceives as one of its gravest national security threats: Khalistani extremism on Canadian soil, a movement that advocates for an independent Sikh state, Khalistan, to be carved out of the Indian state of Punjab. Canada must engage in a serious discussions and address India’s concerns. The participation of the Director of the Canadian Security Intelligence Service (CSIS) at the recent conclave of intelligence chiefs from around the world, held on the sidelines of the Raisina Dialogue on 17-19 2025 March, 2025 in New Delhi was a welcome development. If the  Joint Working Group on Counter Terrorism meets regularly, this could serve as an effective platform for collaboration in this important security-related area.

Addressing security-related concerns is very important for unlocking the economic potential of the relationship. Canada and India’s bilateral trade relationship has seen fluctuating growth. In FY 2022-23, the bilateral trade was around US$ 8.27billion, while in FY 2023-24 it grew marginally to US$ 8.37, largely because of increased imports by India from Canada. While there’s a significant potential for growth, ongoing political tensions have impacted the strengthening of economic ties.

Negotiations for a Comprehensive Economic Partnership Agreement (CEPA) began in 2010 but have been stalled since 2021. In 2022, the focus shifted to a more limited Early Progress Trade Agreement (EPTA), but these talks were paused in September 2023, shortly before Prime Minister Trudeau’s statement on the Nijjar killing. It is necessary to resume these talks to take the bilateral economic relationship forward.  An EPTA can serve as an interim framework for enhancing bilateral economic cooperation and serve as a precursor to the more comprehensive CEPA.

Another important area where cooperation is important is education. Education has historically been a cornerstone of India-Canada relations, with India being a significant source of international students for Canadian Universities. Canadian institutions, particularly those in Toronto, British Columbia, and Montreal, are popular choices for Indian students. A Memorandum of Understanding on Higher Education between Canada and India, renewed in 2018, provides a framework for collaboration.

However, recent changes in Canadian immigration policies under Justin Trudeau, including visa reductions, and diplomatic tensions, have negatively impacted the flow of Indian students. The downturn in bilateral relations also created anxiety about post-study work opportunities and future immigration prospects.

The India-Canada diplomatic row during Trudeau’s term led to serious repercussions for Indian students. According to official Canadian data, over 319,000 Indian students were enrolled in Canada as of 2023. However, due to political tensions and subsequent visa tightening, this number witnessed a dramatic 31% drop in study permits issued in early 2025 compared to the same period in the previous year. Indian students reported delays in visa processing times, added scrutiny, and increased financial documentation requirements. Therefore, the thawing of the diplomatic relationship would lead to the easing of the pressure which has gradually been mounting on the Indian students. Visa timelines could normalise and post-graduation work permit eligibility criteria will become more stable.

What does the future roadmap look like? The India-Canada relationship is currently in a state of flux, marked by both potential for growth and ongoing challenges. While there are significant opportunities for bilateral cooperation, recent diplomatic tensions have created a need for renewed trust-building and institutionalized engagement.

The two countries have a strong foundation for economic ties, with potential for increased trade and investment, especially in areas like renewable energy, clean technology, and infrastructure. Negotiations can be speeded up for a Comprehensive Economic Partnership Agreement (CEPA) and a Foreign Investment Promotion and Protection Agreement (FIPA) to streamline trade and investment flows. Collaboration in sectors like agriculture, chemicals, automobiles, and IT can further strengthen commercial ties. Canada’s expertise in clean technology and infrastructure can be valuable to India’s development goals, while India’s growing economy presents opportunities for Canadian investment.

However, it is important to first address the challenges. Recent diplomatic tensions require a renewed focus on rebuilding trust and addressing concerns related to security and intelligence. From India’s point of view, addressing the security concerns related to Sikh separatism is of vital importance and has to be the starting point. In this context, increased collaboration between law enforcement agencies is essential. Canada has acknowledged India’s concerns and expressed a willingness to engage further. There’s a general understanding that a more constructive relationship is beneficial for both nations, and this could augur well for the future.

The writer is a retired Indian diplomat and had previously served as Consul General in New York. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.