Prime Minister Mark Carney has announced his intention to finalise a significant trade agreement with India by the close of 2023, a move that signals a potential thaw in diplomatic relations between Canada and the country of 1.4 billion. Addressing a gathering of around 100 business leaders and investors in Mumbai on Saturday, Carney emphasised that this visit marks a pivotal moment, transitioning from a period of strained relations to what he describes as a “new, more ambitious partnership” with the world’s fifth-largest economy.
A New Chapter in Canada-India Relations
During his speech, Carney highlighted the importance of reevaluating partnerships in light of a shifting global landscape characterised by economic coercion from larger powers towards smaller nations. He referenced the concept of “strategic autonomy,” a term frequently employed in Indian foreign policy, which encourages countries to engage with various global powers based on their national interests rather than aligning strictly with a single bloc.
“Many nations are concluding that they must develop greater strategic autonomy,” Carney remarked, stressing the need for countries to diversify their economic ties rather than isolate themselves. This approach, he believes, opens significant avenues for collaboration between Canada and India, aimed at mitigating risks, enhancing prosperity, and reinforcing sovereignty.
Emphasising Pragmatic Engagement
In a nod to the differing foreign policy stances of Canada and India, Carney acknowledged that cooperation is possible even amidst disagreements. For instance, while India maintains a cordial relationship with Russia, Canada has invested over $25 billion in support for Ukraine since the onset of the Russian invasion in 2022. Carney described his own approach as one of “values-based realism,” balancing pragmatic engagement with principled diplomacy.
“We are actively taking on the world as it is, not passively waiting for a world we wish to be,” he said, indicating a willingness to engage with India despite the complexities of their respective foreign policies.
Canada’s Economic Offerings
Carney took the opportunity to promote Canada’s vast energy resources, highlighting the government’s initiatives to attract investment through tax incentives and reduced regulatory burdens. He mentioned the introduction of a “super-deduction” that allows a 100% tax write-off for various investments, including in clean energy and electric vehicles.
“Canada’s capacity to export liquefied natural gas to Asia is projected to increase by 50 million tonnes in the coming years,” Carney stated, further noting the marginal effective tax rate for new investments has been lowered to 13%, a figure that is 4.5% lower than that of the United States and significantly below the average across G7 countries.
Strengthening Ties Through Shared Heritage
Highlighting the deep-rooted connections between the two nations, Carney pointed out that approximately two million Canadians have Indian heritage, including notable figures in business, science, and government. Despite the fact that Canadian exports to India currently represent less than 1% of total exports, bilateral investments exceed $30 billion annually.
“The reality is that this activity is nowhere near our potential,” he asserted, suggesting that Canada could emerge as a strategic partner for India in critical minerals, essential for manufacturing, clean technology, and nuclear energy. He also emphasised the opportunity for India to assist Canada in doubling its grid capacity with clean energy by 2040, aligning both countries’ ambitions in the realms of artificial intelligence and the digital economy.
Why it Matters
The proposed trade agreement between Canada and India could redefine economic relations between the two nations, paving the way for enhanced cooperation in vital sectors. As global dynamics shift, fostering stronger ties with India not only presents opportunities for economic growth but also positions Canada as a proactive player on the world stage. Embracing this partnership could lead to significant advancements in technology, clean energy, and strategic resources, ultimately benefiting both countries and their citizens in an increasingly interconnected global economy.
