In a bid to revive and enhance diplomatic relations, Prime Minister Mark Carney has announced his intention to finalise a comprehensive trade agreement with India by the close of 2023. Addressing approximately 100 business leaders and investors in Mumbai, Carney articulated a vision for a renewed partnership with the world’s fifth-largest economy, following a period of strained relations between Canada and India.
A New Era of Cooperation
During his speech at the Canada-India Growth and Investment Forum, Carney described his visit as a significant milestone, marking the transition from a “challenging period” in bilateral relations to a more ambitious and cooperative future. He highlighted the importance of this partnership, especially in light of the shifting global landscape characterised by economic tensions and the increasing need for nations to assert their independence and self-reliance.
Carney remarked on the current geopolitical climate, stating, “The breakdown of the rules-based international order has ushered in a more volatile global era,” where larger nations exert economic pressure on smaller states. He acknowledged India’s approach to foreign policy, which he termed “strategic autonomy,” indicating a preference for engaging with multiple global powers rather than aligning with a single bloc.
Emphasising Shared Interests
The Prime Minister further elaborated on the potential for collaboration between Canada and India, despite their differing foreign policy stances. For instance, he noted India’s continued ties with Russia, contrasting this with Canada’s extensive support for Ukraine amidst ongoing conflict. Carney’s approach, which he described as “values-based realism,” reflects a recognition that while nations may diverge in their interests and values, there remains significant scope for partnership.
“Building true strategic autonomy requires diversification, not isolation,” Carney asserted, underscoring the mutual benefits that could arise from enhanced cooperation. This partnership could lead to increased prosperity and sovereignty for both nations.
Canada’s Economic Advantages
In his pitch to Indian investors, Carney showcased Canada’s vast energy resources and favourable business environment. He announced the introduction of a super-deduction programme, offering a 100 per cent tax write-off for investments in various sectors, including manufacturing, clean energy, and research and development. He noted that Canada’s liquefied natural gas export capacity to Asia is projected to rise by 50 million tonnes in the coming years, positioning Canada as a vital energy partner for India.
With a marginal effective tax rate for new investments now at 13 per cent—lower than that of the United States and significantly below the G7 average—Carney highlighted the competitive advantages of investing in Canada. He emphasised the historical ties between the two nations, pointing out that around two million Canadians have Indian ancestry, spanning various sectors from business to science and government.
A Vision for Future Collaborations
Despite current trade figures showing that Canadian exports to India account for less than 1 per cent of total exports, Carney expressed optimism about the future. He stated that the existing two-way investments exceed $30 billion annually but are still well below the potential that exists.
Carney identified critical minerals as a key area for collaboration, suggesting that Canada could become a strategic partner for India’s manufacturing and clean technology sectors. He also noted the alignment of India’s advancements in artificial intelligence and the digital economy with Canada’s ambitions in these fields, including the development of quantum technologies.
Why it Matters
The evolution of Canada-India relations, as articulated by Prime Minister Carney, signifies a broader shift towards collaborative diplomacy in an increasingly complex global environment. As both nations seek to strengthen their economic ties, the potential for mutual growth and innovation not only benefits Canada and India but also sets a precedent for how countries can navigate geopolitical challenges together. The forthcoming trade agreement could pave the way for enhanced investments, technological partnerships, and a stronger bilateral relationship, ultimately positioning both nations to thrive in a volatile international landscape.