India and Canada want to conclude a Comprehensive Economic Partnership Agreement (CEPA) by the end of 2026. The fourth round of negotiations is underway in New Delhi this week. Mint explains why the proposed trade agreement matters and what is at stake for both sides.
Why are India and Canada pushing for a CEPA now?
India and Canada formally relaunched negotiations for a CEPA when Canadian Prime Minister Mark Carney visited India in March. The countries set an end-2026 deadline for concluding the pact and agreed to work towards increasing bilateral trade to $50 billion by 2030.
Both countries want stronger economic ties following a period of strained bilateral relations. The CEPA is positioned as a broader economic framework covering goods, services, investments and other areas, rather than only a tariff-cutting agreement.
How much do India and Canada trade currently?
India’s commerce ministry data shows bilateral merchandise trade was at $8 billion in FY26, with Indian exports at about $4.67 billion and imports from Canada at $3.28 billion.
India’s major exports to Canada include pharmaceuticals, engineering goods, chemicals, textiles and electronics, while imports include pulses, fertilizers and energy products. Services trade adds another dimension, particularly through India’s IT and business services exports.
The $50 billion target for 2030 represents a more than sixfold expansion from current levels.
What will the CEPA cover?
Trade in goods is a key component, with negotiators discussing tariff concessions and market access. Rules of origin will determine which products qualify for preferential treatment.
The talks also cover trade in services, technical barriers to trade, sanitary and phytosanitary measures, intellectual property, investment and digital trade.
Services are particularly important because Indian companies have a significant presence in IT, business and professional services. Provisions related to the movement of professionals could be an important part of the negotiations.
What does Canada stand to gain?
Canada wants greater access to India’s growing market for goods, services and investment. Canadian sectors with potential opportunities in India include agriculture and agri-food, energy, fertilizers, critical minerals, clean technology and other resource-based industries.
For Canada, deeper trade ties with India fit into its effort to diversify its export markets and reduce dependence on a smaller number of trading partners.
Ottawa wants two-way trade with India to touch CAD 70 billion by 2030, a target broadly aligned with the $50 billion goal.
What does India stand to gain?
India’s exporters could get better market access in sectors such as pharmaceuticals, textiles, engineering goods, chemicals, electronics and services.
Canada is an important source of energy and critical minerals. India could get greater access to resources including uranium and critical minerals, while creating opportunities for investment and supply-chain partnerships.
Indian businesses will get greater certainty through agreed rules on tariffs, standards, services and other trade-related issues.
Why is access to the goods and services market important?
Tariff reductions can make Indian exports more competitive in Canada and Canadian products more competitive in India. However, the commercial impact of a trade agreement also depends on non-tariff measures, standards and regulatory requirements.
Rules of origin are important because they determine whether a product can receive preferential tariff treatment. The two sides need to agree not only on tariff concessions but also on the conditions attached to those concessions.
In services, India seeks wider opportunities for its professionals and services companies, while Canada has an interest in accessing India’s rapidly expanding services and consumer market.
How quickly are the negotiations moving?
The first round was held virtually in March, followed by a second round in May and a third round in Ottawa in July. The fourth round is underway in New Delhi from 14 to 18 September. Commerce secretary Rajesh Agrawal said two chapters have already been finalized.
Canadian International Trade Minister Maninder Sidhu is visiting Mumbai on 18-19 September to meet commerce and industry minister Piyush Goyal.
Why does the end-2026 deadline matter?
The deadline reflects political commitment from both governments to use the current improvement in bilateral relations to build a stronger economic partnership.
India is expanding its network of trade agreements with major economies, while Canada is looking to deepen its engagement with the Indo-Pacific and diversify trade. A CEPA with India would serve both objectives.
The proposed pact also comes as companies and governments place greater emphasis on resilient supply chains, critical minerals, energy security and diversification of trade.
What are the challenges?
The biggest challenge will be reaching agreement on market access, particularly in sensitive goods and services sectors.
Negotiations can move quickly on technical chapters but take longer on areas involving politically or economically sensitive sectors. Both sides also have to finalize the detailed tariff schedules, rules of origin and other provisions.