India Canada Trade

India Canada Trade Agreement

Last updated: Sep, 2023

Introduction

India established diplomatic relations with Canada in 1947 and has established their rapport based on shared values of democracy, pluralism, expanding economic engagement, regular high-level interactions, and long-standing people-to-people ties. Both countries have been working to enhance bilateral cooperation in several areas of mutual importance.

India-Canada Trade

In 2022, India was Canada’s 9th-largest merchandise trading partner in the Indo-Pacific region, the 13th-largest merchandise trading partner globally, and the 14th-largest destination for merchandise exports.
India is a key partner as Canada strengthens its economic links to the Indo-Pacific under a new, comprehensive strategy for the region.
Canada and India achieved a bilateral trade relationship that reached nearly US$ 9 billion (C$ 12 billion) in 2022, a significant increase of 57% from the previous year.
It is estimated that India-Canada Comprehensive Economic Partnership Agreement (CEPA) between Canada and India would boost bilateral trade by US$ 4.4-6.5 billion (C$ 6-8.8 billion) and yield a GDP gain of US$ 3.8-5.9 billion (C$ 5.1-8 billion) for Canada by 2035.

Major exported items from India to Canada with amount & quantity

India exported 5,143 commodities to Canada in FY23.
India’s export to Canada stood at US$ 4.11 billion in FY23 and US$ 3.76 billion in FY22.
Major exported items from India to Canada include drug formulations and biologicals (US$ 432 million); followed by products of iron and steel (US$ 312 million), marine products (US$ 187 million), and RMG cotton including accessories (US$ 180 million), etc. in FY23.
Exports to Canada during April-May 2023 stood at US$ 614 million.

Major imported items by India from Canada with amount & quantity

India imported 2,054 commodities from Canada in FY23.
Imports from Canada to India were valued at US$ 4.05 billion in FY23 and US$ 3.13 billion in FY22.
Major India's imports from Canada include coal, coke and briquettes etc. (US$ 1.05 billion); followed by fertilizers manufactured (US$ 719 million), pulses (US$ 370 million), pulp and wastepaper (US$ 323 million), and iron and steel (US$ 235 million), etc. in FY23.
Imports from Canada during April-May 2023 stood at US$ 633 million.

Recent Trends and Developments

India and Canada decided to consider the interim agreement and the 5^th ministerial dialogue on trade and investment was held on March 11, 2022. The Ministers agreed to formally re-launch the negotiations for India-Canada Comprehensive Economic Partnership Agreement (CEPA) and also consider an Interim Agreement or Early Progress Trade Agreement (EPTA) that could bring early commercial gains to both countries.
The Early Progress Trade Agreement (EPTA) between India and Canada is likely to be clinched in the second half of 2023.
India and Canada have been in negotiations to finalize a Foreign Investment Promotion and Protection Agreement (FIPA).
Two MoUs were renewed at the 7th India-Canada Joint Science and Technology Cooperation Committee (JSTCC) meeting that took place in Ottawa, setting priorities for the next period in a variety of innovative fields. The focus areas of the collaboration include national missions, quantum computing, artificial intelligence (AI), and cyber-physical systems, among others. Many Indian students studying in Canadian universities will benefit from the collaboration.
Canada has agreed to examine the request for Conformity Verification Body (CVB) status to APEDA (Agricultural and Processed Food Products Export Development Authority) for hassle-free export of Indian organic products.
The bilateral relationship between India and Canada could get a major boost next year, with as many as eight Canadian cabinet ministers and Prime Minister Justin Trudeau expected to visit to participate in G20 events.
India and Canada are aiming to seal an initial agreement in 2023 to increase their trade and expand investment while setting out a mechanism to deal with disputes.
India and Canada held the sixth Ministerial Dialogue on Trade & Investment (MDTI) in Ottawa on May 8, 2023, co-chaired by Mr. Piyush Goyal, Union Minister of Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles, Government of India and Ms. Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development, Government of Canada. The Ministers emphasised the solid foundation of the trade and economic relationship between India and Canada and recognized the significant opportunity to deepen bilateral ties and economic partnership.

Economic Relations

More than 600 Canadian companies and organizations have established a presence in India. Hundreds more are actively pursuing business opportunities there. The bilateral commercial relationships between the two countries stand at US$ 100 billion, which includes US$ 70 billion of Canadian portfolio investment into India. In 2020, Canadian direct investment in India amounted to US$ 2 billion. Canadian portfolio investment in India is estimated to have grown more than 50% over the past five years, reaching about US$ 27 billion.

As of March 2023, Canada was ranked as the 18th largest foreign investor in India, having made cumulative investments amounting to US$ 3.30 million since April 2000. Canadian investments constitute approximately 0.5% of the total foreign direct investment (FDI) inflow into India.

In FY22 Canada invested nearly US$ 76 million to support 52 international assistance projects in India. Canada’s funding primarily focused on sustainable economic development, the treatment of infectious diseases, nutrition, and renewable energy projects in vulnerable communities.

As of March 2021, Canada invested nearly US$ 24 million in 2018-19 to support 75 projects in India via Grand Challenges Canada. The main programming sector of the Partnerships for Development Innovation Branch is maternal, newborn and child health, which includes support to early childhood development.

IDRC continues to have an active presence in India with projects focusing on the links between climate change and migration; the reduction of violence against vulnerable populations; women’s rights, security and access to justice; economic opportunities for Indian workers, especially women; and improving food security. Since 1974, IDRC has programmed 638 activities worth US$ 152.2 million in India.

Conclusion

Canada and India have longstanding bilateral relations built upon shared traditions of democracy, pluralism, and strong interpersonal connections, and their relations are moving on a positive trajectory. With the establishment of the Ministerial Dialogue on Trade and Investment, bilateral trade relations are expected to strengthen further in the coming times. The growing economy of India offers immense opportunities to the consumer population of Canada. The G-7 country has an advanced and resource-rich economy which will be a good relationship for India to uphold.

Contacts

High Commission of India, Ottawa, Ontario, Canada
Mr. Sanjay Kumar Verma (High Commissioner)
Mr. Rajeev Madaan (Counsellor (Pol, Com & PIC));
Email: com.ottawa@mea.gov.in
High Commission of Canada to India
Address: 7/8, Shantipath, Chanakyapuri, New Delhi 110021
Telephone: +91 11 4178 2000
Email: delhi@international.gc.ca