India won't resume FTA talks with Canada anytime soon as solution eludes Khalistan issue: Source

India and Canada paused talks over an interim trade deal around September 2023.

India has no plans to resume negotiations for a free trade agreement with Canada anytime soon since both sides are yet to find a political solution over the issue of Khalistani activities, a person aware of the developments said.

“Unless there is a political solution, we cannot resume negotiations,” the person told Moneycontrol. The talks were stalled around September 2023.

India may consider restarting talks on the trade deal only after federal elections scheduled in Canada in October 2025, the person said. If there is a change of guard in Canada, it could help resume negotiations, the person said.

News of the stalled India-Canada free-trade talks came in around the G20 Summit in New Delhi last September. Prime Minister Narendra Modi reportedly had also pulled aside his Canadian counterpart during the summit to raise the issue of Khalistani activists, who are seeking an independent state carved out of India.

As per foreign media, the decision to pause the talks originated in Ottawa as relations between the two nations were strained following the rise of the Khalistani movement in Canada.

Canadian trade minister Mary Ng suggested in November that her country won't restart the trade talks until India cooperates with the investigation into the murder of Sikh activist Hardeep Singh Nijjar in Vancouver.

This was after Canadian Prime Minister Justin Trudeau claimed in parliament on September 18, 2023, that there was evidence linking Indian government agents to the murder of Nijjar.

Course correction

Responding strongly, India termed the allegations unsubstantiated and absurd and a means to derail focus on Khalistani extremism. India has asserted that Trudeau’s government has been lenient towards pro-Khalistan violence, an issue that New Delhi has raised consistently over the past few years.

There are expectations that ties between India and Canada may see a course correction if a new regime is voted to form the government in Ottawa. Recent surveys show that Trudeau’s Liberal Party is trailing its Conservative rivals by a significant margin.

Negotiations for a free trade deal between India and Canada were re-launched in March 2022 after a hiatus of about a decade with as many as nine rounds of talks conducted between the two countries till July 2023. Before diplomatic ties nosedived, both sides expected to sign an interim free trade deal by 2023, a precursor to a Comprehensive Economic Partnership Agreement.

Trade between India and Canada is largely balanced, totalling about $8 billion annually, with Ottawa accounting for less than 1 percent of India’s total trade.