Prime Minister Mark Carney has announced an ambitious goal to finalise a trade agreement with India by the end of 2023, marking a significant step in mending the diplomatic relations between the two nations. Speaking to a gathering of around 100 business leaders in Mumbai, Carney highlighted that this initiative signals the end of a “challenging period” in Canada-India relations and the start of a more collaborative partnership with one of the world’s largest economies.
A New Era in Canada-India Relations
During his address, Carney underscored the importance of evolving global dynamics, noting that nations are increasingly seeking “strategic autonomy” to navigate a world marked by economic coercion from more powerful states. “Many are concluding that they must develop greater strategic autonomy,” he stated, reflecting a shared sentiment with India’s foreign policy approach that prioritises engagement with multiple global powers rather than aligning strictly with one bloc.
This concept of strategic autonomy, embraced by India, underlines the country’s intention to assert its national interests while maintaining relationships with diverse international players, even those with contrasting values. Carney remarked, “Building true strategic autonomy requires diversification, not isolation,” emphasising the potential for Canada and India to collaborate in a way that enhances both nations’ sovereignty and prosperity.
Opportunities for Collaboration
Amidst the backdrop of foreign policy differences, Carney acknowledged that Canada could still work alongside India, despite occasional disagreements. He pointed out India’s productive relationship with Russia, juxtaposing it with Canada’s substantial financial support to Ukraine amidst the ongoing conflict. This recognition of differing diplomatic stances underscores a pragmatic approach to international relations.
In his pitch to the Mumbai audience, Carney showcased Canada’s energy resources and favourable business environment, including significant tax incentives introduced by his government. He noted, “We have put in place a super-deduction – a broad-based 100-per-cent tax write-off for everything from manufacturing assets to intelligence infrastructure, research and development, clean energy, and electric vehicles.”
Moreover, he projected that Canada’s capacity to export liquefied natural gas to Asia will significantly increase, enhancing energy collaboration between the two nations. With a marginal effective tax rate for new investments now at 13 per cent—4.5 per cent lower than that of the United States—Carney is keen to position Canada as an attractive destination for Indian investors.
Strengthening Economic Ties
Despite the potential for growth, Carney acknowledged that current Canadian exports to India represent less than 1 per cent of the nation’s total exports. He highlighted the existing two-way investments, which exceed $30 billion annually, as an area ripe for expansion. “The reality is that this activity is nowhere near our potential,” he commented, reinforcing the idea that Canada and India could become strategic partners in critical minerals, particularly as India seeks to bolster its manufacturing and clean technology sectors.
Carney also pointed out that Indian leadership in artificial intelligence and the digital economy aligns with Canada’s aspirations to advance in these fields, presenting further opportunities for partnership. He concluded his remarks by expressing optimism about the shared goals of both nations in enhancing defence innovation and sustainability.
Why it Matters
The proposed trade agreement between Canada and India represents a pivotal moment in the trajectory of bilateral relations, especially amid shifting global power dynamics. As both nations seek to mitigate risks and leverage their respective strengths, this partnership could lead to significant economic benefits and enhanced geopolitical stability. For Canada, deepening ties with India—a nation of 1.4 billion people—could unlock new markets and innovation opportunities, while India stands to gain valuable resources and expertise from its Canadian counterpart. This collaboration is not just about trade; it reflects a broader strategy to navigate an increasingly complex global landscape, positioning both countries for future success.
