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Prime Minister Mark Carney has announced his ambitious goal of finalising a comprehensive trade agreement with India by the end of this year, signalling a pivotal moment in the relationship between the two nations. Speaking to nearly 100 business leaders and investors in Mumbai, Carney emphasised that this visit represents a turning point, marking the conclusion of a “challenging period” in Canada-India relations and the dawn of a more collaborative partnership with one of the world’s largest economies.
Renewed Diplomatic Ties
During his address, Carney acknowledged the recent strains in diplomatic relations, asserting that these changes are now leading to a stronger alliance. He described the current global climate as increasingly volatile, where larger nations often exert economic pressure on smaller states. Carney underscored the importance of nations striving for “strategic autonomy,” a term that resonates deeply within Indian foreign policy, which advocates for engagement with multiple global powers rather than alignment with a singular bloc.
He stated, “Building true strategic autonomy requires diversification, not isolation,” highlighting the potential for India and Canada to collaborate on various fronts to bolster economic resilience and sovereignty.
Navigating Foreign Policy Differences
Carney’s remarks also touched upon the contrasting foreign policies of Canada and India, particularly their divergent relationships with Russia. While India maintains a robust partnership with Russia, including significant energy and arms trade, Canada has committed over $25 billion in support of Ukraine amidst its ongoing conflict with Russia. This difference illustrates the complexities of international relations that both countries must navigate.
Carney noted that despite these differences, Canada is committed to a values-based realism that recognises the necessity of partnerships, even when interests do not fully align. “We are actively taking on the world as it is, not passively waiting for a world we wish to be,” he asserted, reinforcing Canada’s pragmatic approach to international diplomacy.
Economic Opportunities Ahead
The Prime Minister seized the opportunity to promote Canada’s economic advantages, drawing attention to its rich energy resources and favourable taxation policies. He introduced a new initiative—a broad-based 100% tax write-off for investments in various sectors, including clean energy and electric vehicles, which he believes will attract significant foreign investment.
Carney also projected a substantial increase in Canada’s capacity to export liquefied natural gas to Asia, estimating an additional 50 million tonnes in the coming years. He claimed that Canada’s marginal effective tax rate for new investments has been lowered to 13%, which is notably competitive compared to the United States and the G7 average.
Recognising the deep-rooted ties between Canada and India, with approximately two million Canadians of Indian descent, Carney highlighted the importance of leveraging these connections to enhance bilateral trade, which currently accounts for less than 1% of Canadian exports to India. He remarked, “The reality is that this activity is nowhere near our potential,” and outlined Canada’s potential role as a strategic partner in critical minerals essential for India’s manufacturing and clean technology sectors.
The Future of Canada-India Relations
Carney’s vision extends beyond mere trade agreements; he sees opportunities for cooperation in AI, digital economies, and defence innovation. The Prime Minister expressed optimism about the synergies between Canada’s ambitions in developing AI technologies and India’s leadership in the digital space, paving the way for collaborative advancements that could benefit both nations.
As bilateral investments already exceed $30 billion annually, the Prime Minister’s message is clear: there is considerable room for growth and partnership.
Why it Matters
The potential trade agreement between Canada and India is not just about economics; it signifies a broader shift in how nations interact in a rapidly changing global landscape. As both countries seek to enhance their strategic autonomy, this partnership could redefine their roles on the world stage, promoting mutual prosperity while navigating the complexities of international relations. The outcome of these discussions could have lasting implications not only for Canada and India but for the geopolitical balance in the Indo-Pacific region as well.