What a reset in Canada-India ties would mean for trade, investment and students

Canada’s footprint is more visible in portfolio investment

• India-Canada ties may boost trade, investment, and student flows
• Canada's FDI share in India rose to 0.57 percent in FY25
• Indian student permits in Canada dropped but may rise with improved ties

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A diplomatic reset between New Delhi and Ottawa, marked by Prime Minister Mark Carney’s visit earlier this week, could reopen trade, investment and student mobility channels that had cooled in recent years, even though Canada has historically been a relatively small but steady economic partner for India.

Trade ties modest but stable

Canada’s share of India’s total trade has largely hovered below the 1% mark for over a decade. It rose from 0.54 percent in FY11 to a peak of 0.97 percent in FY16, before easing again. In recent years, the share has stabilised around the 0.70-0.75 percent range, standing at 0.75 percent in FY24 and 0.74 percent in FY25.

The data suggests that while bilateral trade has not been structurally large in India’s overall trade basket, it has remained resilient. A thaw in relations could help lift this ratio closer to the earlier FY16 highs, especially as both countries look to diversify supply chains.

Investment links deeper than trade

Canada’s footprint is more visible in portfolio investment. Its share in India’s total FPI holdings rose steadily from around 2.6 percent in 2012 to a peak of roughly 3.6 percent in early 2020, before gradually moderating. As of January 2026, Canada accounts for 2.6 percent of India’s FPI, down from pandemic-era highs but still significant.

On the FDI front, Canada’s ranking has improved. It moved from 20th position in FY22 with inflows of $2.5 billion (0.42 percent share) to 17th place in FY24 and FY25, with inflows rising to $3.86 billion and $4.17 billion, respectively. The share in total FDI also climbed to 0.57 percent.

Students: The biggest swing factor

The most dramatic shifts have been in education flows. The number of study permits issued to Indian students by Canada rose from 31,920 in 2015 to a peak of 278,000 in 2023, with Indians accounting for more than 41 percent of all Canadian study permits in 2022. However, permits fell sharply to 94,605 in 2025, bringing India’s share down to 24.6 percent. If diplomatic ties normalise, student mobility could be the fastest segment to rebound.

A reset in ties may not immediately transform trade ratios, but it could meaningfully revive capital flows and education links — sectors where the India–Canada corridor has shown the strongest momentum.