India-Canada Interim Trade Deal Resumption

After years of strained relations between India and Canada, efforts are underway to rejuvenate diplomatic ties, primarily through resuming talks for an interim trade agreement. This shift is influenced by the global trend towards bilateralism and a change in the Canadian government leadership.

Diplomatic Developments

• India and Canada decided to restart trade discussions after a two-year hiatus, following a meeting between the Prime Ministers of both countries at the G7 Summit.
• This decision includes resuming ministerial dialogues and appointing new high commissioners to improve bilateral relations.

The diplomatic friction reached its peak following the assassination of Khalistani separatist, leading to accusations, diplomatic recalls, and expulsions, severely affecting trade negotiations.

Trade Negotiations

• Initial talks for a Comprehensive Economic Partnership Agreement (CEPA) began 15 years ago, but progress stalled.
• In March 2022, both nations aimed to develop an Early Progress Trade Agreement (EPTA) as a step toward CEPA.
• Talks will focus on: 
  • Goods and services
  • Rules of origin
  • Sanitary and phytosanitary measures
  • Technical barriers and dispute settlement

India seeks enhanced market access for its pharmaceuticals, garments, and agricultural goods, while Canada aims to boost its agricultural exports to India.

Economic Complementarities

• India imports crucial raw materials from Canada, such as lentils and coking coal.
• Canada's focus is on sectors like textiles, gems, agri-products, and clean energy, where India has global competitiveness.

An interim trade deal could further solidify these engagements and address existing challenges, fostering a more robust economic partnership.