In a sharply symbolic tweet this week, Indian Prime Minister Narendra Modi struck a new tone: “Glad to receive a call from Prime Minister @MarkJCarney of Canada… India and Canada will work together with renewed vigour, guided by mutual respect and shared interests.”
The message, gracious and forward-looking, would have seemed unthinkable just a year ago, when diplomatic ties between the two democracies had collapsed into open hostility.
But something has shifted. With Mark Carney’s election as Prime Minister and Anita Anand – herself a Canadian of Indian origin – taking over as Foreign Affairs Minister, the opportunity for a reset is real. Whether that opportunity is seized or squandered will depend not just on diplomatic choreography but on whether both countries can confront the deeper, more persistent issues that have long held their relationship back.
India – Canada: A History of Mistrust
India-Canada relations have always been more complicated than they appear on paper. Despite the natural cohesion – two Commonwealth democracies and a deep people-to-people connection – political ties have been fragile, even under the surface.
The most persistent source of friction has been Canada’s tolerance, if not tacit encouragement, of Khalistani separatist activism. The Khalistan movement, once violent and still deeply polarizing, is a cause with a militant history – one that, for India, is inseparable from questions of sovereignty and national security. This is not a civil rights issue. It’s a painful chapter that claimed thousands of lives and, ultimately, the life of a sitting Prime Minister, Indira Gandhi, in 1984.
What Canada fails to grasp is this is not a contemporary expression of an oppressed minority. Sikhs remain one of the most politically and economically empowered communities in India.
Instead Canada continues to frame such activism as protected speech, often failing to distinguish between legitimate dissent and the glorification of violent separatism. In India’s view, that line has not only been blurred – it has been crossed repeatedly, while Canada looks the other way.
The 2023 diplomatic rupture – when then Prime Minister Justin Trudeau accused Indian agents of involvement in the killing of Hardeep Singh Nijjar – was not the beginning of the breakdown. It was the culmination of long-simmering tensions, which had already been inflamed by public demonstrations in Canada with floats that glorified the assassination of former Indira Gandhi. Such incidents were seen in India not just as provocations, but as a disturbing failure by Canadian authorities to draw boundaries around extremist expression.
From Collapse to Contact
With Carney now at the helm, the tone has unmistakably shifted. Unlike his predecessor, Carney is not a career politician prone to theatrics or posturing. His credentials as a former central banker and global economic strategist position him as a technocrat more focused on outcomes than optics. That lends his foreign policy a quieter, more transactional pragmatism – one aimed at getting things done, not playing to galleries.
The appointment of Anita Anand, an Indo-Canadian who commands respect across the political spectrum, is also being read in New Delhi as a quiet overture of goodwill.
Among her first diplomatic engagements as Foreign Minister, Anand held a conversation over phone with her Indian counterpart, External Affairs Minister S. Jaishankar. It was a quiet signal that both sides were ready to resume dialogue, and perhaps more importantly, to do so differently. The conversation marked the first high-level contact since the 2023 rupture and served as a measured first step in rebuilding trust.
Equally important, gone too is the political constraint that shaped much of Ottawa’s approach to India in recent years: the influence of the NDP under Jagmeet Singh. A Sikh himself and one of the most vocal critics of the Indian government on the international stage, Singh held disproportionate sway during the Trudeau years as kingmaker in a minority government. While Carney’s government is still a minority, it is not dependent on NDP support. And with Singh having lost both his seat and the party leadership this time, that era of diaspora-aligned pressure on foreign policy has hopefully ended.
Modi’s tweet this week acknowledged the change and left the door open for a new kind of partnership based on “mutual respect.” That phrase, used deliberately, signals what India has long said it wants: engagement without interference.
Trade: The Underachieving Giant
For two G20 countries with complementary economies, bilateral trade has been surprisingly underwhelming. Canada-India trade stood at just $9.36 billion in 2023 – far less than what India does with the UAE, or what Canada does with smaller economies like South Korea.
Canada has what India needs: natural gas, potash, critical minerals, agri-products, and education capacity. India has what Canada needs: pharmaceuticals, textiles, engineering goods, and an enormous pool of skilled labor.
And yet the deeper economic relationship is quietly accelerating. Canadian pension funds increased their exposure to India from 10% (2003,-2018) to over 25% between 2019 and 2023. India is now their second most favored foreign investment destination after Australia, overtaking China in recent years. Canada has also climbed into the top 20 of India’s FDI sources, ranking 18th – a notable rise for a country without a formal trade agreement.
Indian students remain the largest international cohort in Canadian universities. Tech and financial partnerships between the two countries are growing steadily. Indian IT and edtech firms have expanded their presence in Toronto, Vancouver, and Waterloo. Canadian companies, in turn, are investing in India’s infrastructure, renewables, and digital services.
The energy for economic engagement is already there – it just lacks institutional scaffolding. The long-stalled Comprehensive Economic Partnership Agreement (CEPA) is not a formality. It’s the missing backbone in a relationship that’s already doing the work informally.
Structurally Strong, Politically Fragile
Despite the political frost, people-to-people ties have quietly flourished. Over 1.86 million Indo-Canadians (Census 2021) – doctors, entrepreneurs, tech workers, students – embody the very synthesis both countries claim to aspire to. Canadian provinces, universities, and private companies continue to work with Indian partners, even when federal relations have grown tense.
This is the paradox of the relationship: structurally strong, politically fragile. If the Carney-Modi dialogue is to mean anything, it must lead to action – not statements.
Symbolism won’t cut it anymore.
Three Priorities for a Real India-Canada Reset
- Revive CEPA with urgency and realism: Don’t aim for a perfect deal. Aim for a phased, sectoral agreement that delivers near-term economic value while laying the groundwork for deeper integration.
- Depoliticize diaspora tensions: Canada must be clearer about the limits of acceptable activism. Expression is a right – but platforms that glorify terrorism or promote secessionist violence cannot be waved off as civic engagement.
- Lean into strategic complementarity: Both countries are trying to reduce their dependency on China and expand economic partnerships. Canada needs access to new markets and workforces. India needs energy, investment, and tech cooperation. These needs align – if allowed to.
Beyond Repair: A New Relationship
Carney and Modi have a window. They are not bound by the baggage of the Trudeau years. They are both pragmatic in worldview and appear largely unconcerned with ideological grandstanding. They understand that in a world of weaponized trade and shifting geopolitical alliances, relationships must be built on strategic clarity, not petty politics and egos.
India and Canada don’t need to agree on everything. But they do need to stop letting their worst instincts dictate the shape of their diplomacy. A new path is possible – if both sides are willing to step forward and shake off the patterns of the past.
The door is open. The world is watching.
Written By – Anusuya Datta
Anusuya Datta is a Canadian journalist and editor who writes at the intersection of technology, sustainability, and the public good. When not dissecting tech feuds or advocating for better data governance, she tends to her garden in the Prairies.
