MC EXCLUSIVE India-Canada FTA talks may resume only after EU, US deals close

Prime Minister Narendra Modi with his Canadian counterpart Mark Carney

India and Canada ties may be on the mend but the resumption of free trade agreement (FTA) talks is unlikely this year, as the government prioritises deals with the United States, the European Union and some other countries, an official told Moneycontrol.

The commerce ministry is in talks with New Zealand, Peru, Chile, Oman and Qatar as well to seal FTAs at the earliest.

“It is a general rewarming of relationships; previous talks broke down not because of trade reasons. The commerce department is busy with a slew of FTAs, so Canada may not be top of the lot,” the government official said on condition of anonymity. “There needs to be bandwidth for negotiations and hence it is a matter of prioritisation.”

On October 13, India and Canada agreed to commence at an early date ministerial-level discussions on bilateral trade and investment.

The two sides also agreed to collaborate on agriculture, science and technology, artificial intelligence, critical minerals and energy and strengthen institutional capacities at their high commissions and consulates. Civil nuclear collaboration is also on agenda.

Trade between India and Canada grew 3.2 percent on-year in 2024-25 to 8.67 billion.

“FTA with Canada will take time as full-fledged missions haven’t started running yet and it will also take time to better relations. Unlikely talks will start this year since it is not on priority list for the government,” an industry source said.

FAT talks between the two sides were re-launched in March 2022 after a decade, with nine rounds of conducted till July 2023.

Talks were suspended around September 2023, as ties nosedived due to the rise of pro-Khalistani activities in Canada and then-prime minister Justin Trudeau’s statement in parliament of evidence linking Indian government agents to the murder of Hardeep Singh Nijjar, a Sikh separatist.

Before the freeze, both sides expected to sign an interim free trade deal by 2023, a precursor to a Comprehensive Economic Partnership Agreement.

After Trudeau’s departure in January 2025, Ottawa and New Delhi have taken steps to improve the fractured relationship.

In June, Prime Minister Narendra Modi held a bilateral meeting with his Canadian counterpart Mark Carney on the sidelines of the G7 summit. The two leaders stressed on the need to restart the stalled negotiations on the Early Progress Trade Agreement (EPTA) to paved the way for a Comprehensive Economic Partnership Agreement (CEPA).

Since the meeting, India and Canada ties have improved, including the return of high commissioners.