India and Canada are set to commence discussions on the Terms of Reference (ToR) for a potential free trade agreement, according to Commerce and Industry Minister Piyush Goyal. This development signals a thaw in trade relations after Canada paused negotiations in 2023.
The Terms of Reference will outline the scope and modalities of the proposed trade pact. Minister Goyal highlighted this development while discussing the conclusion of negotiations for the India-New Zealand Free Trade Agreement.
A Comprehensive Economic Partnership Agreement (CEPA), a type of free trade agreement where countries reduce or eliminate customs duties on a majority of traded goods, is being considered by both nations. CEPA also streamlines regulations for skilled professionals' mobility and encourages investments. The goal is to potentially double trade between the two countries by 2030.
Past discussions between India and Canada for an interim agreement included over half a dozen rounds. However, these negotiations were halted in 2023 when bilateral relations deteriorated.
India has been actively pursuing free trade agreements with several countries. It has finalized trade pacts with Australia, the UK, and New Zealand. Negotiations with the US are also reportedly in advanced stages, and discussions are ongoing with the European Union.
The renewed interest in trade talks between India and Canada follows meetings between Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney, including discussions at the G20 summit. These interactions have seemingly paved the way for stronger ties and a focus on economic collaboration.
Piyush Goyal has emphasized that mutual trust and respect are crucial for any such agreement, fostering confidence among investors and businesses. He noted the potential for collaboration in critical minerals, processing technologies, and nuclear energy, particularly regarding uranium supplies from Canada, to diversify supply chains.
Bilateral trade between the two countries reached $18.38 billion in 2023. In the fiscal year 2024-25, India's exports to Canada increased by 9.8% to $4.22 billion, while imports decreased by 2.33% to $4.44 billion. Furthermore, the strong Indian diaspora of approximately 2.9 million people and over 427,000 Indian students in Canada contribute significantly to the relationship between the two countries.
Both sides have appointed chief negotiators for the upcoming trade pact negotiations. Brij Mohan Mishra, Joint Secretary in the Department of Commerce, will represent India, while Bruce Christie will be Canada's chief negotiator.
