‘Working together, combining resources, talent, scale, we think India and Canada can be world beaters’

Why in the News

Canada’s High Commissioner to India has set out the instruments now in place to rebuild the bilateral relationship, and has stated confidence that the Comprehensive Economic Partnership Agreement (CEPA) will be concluded by the end of the year.

How has the relationship been rebuilt since the 2023 rupture?

1. Leader-level contact restored: The two Prime Ministers have met four times over the past year. New envoys were announced in June last year after the reset was agreed.
2. Security channels reopened: Security officials on both sides are now in regular contact over practical cooperation. The stated purpose is that neither side is surprised by the other’s statements or actions.
3. A terrorist entity listing: Canada has listed the Bishnoi gang as a terrorist entity and launched a financial crimes commission. The stated trigger is extortion pressure on the Indian community in Canada from such gangs.
4. The separatism question remains open: Canada’s position is that political expression is protected in a democracy, so it will not restrict views it disagrees with. Its intelligence agency’s report tabled before Parliament refers to Khalistan actors and to the Air India bombing.

What does Canada offer India on energy and critical minerals?

1. Scale in hydrocarbons: Canada ranks fourth in oil reserves and production, fifth in natural gas production, fifth in liquefied petroleum gas production and sixth in nuclear power.
2. Export capacity is being built out: By 2030 Canada expects to export 50 million tonnes of natural gas through its West Coast ports, with a 400 per cent increase in liquefied petroleum gas export capacity. A newly announced pipeline will allow the export of two million barrels of oil, against a production of five to six million barrels a day.
3. India’s import volume matches that scale: India imports crude oil at roughly the level Canada produces each day. Canada has never sold India oil, gas or liquefied petroleum gas.
4. Minerals are in the ground, not in production: Canada holds rare earths, lithium and graphite, and 20 per cent of the world’s tungsten reserves. It has no active tungsten mine, and opening one takes three to five years.

How central is nuclear cooperation to the relationship?

1. A concluded contract: A uranium sale worth $2.3 billion for India’s reactors was concluded during the Canadian Prime Minister’s visit.
2. The installed base is Canadian in origin: Eighteen of India’s 24 existing reactors are based on CANDU technology.
3. Canada’s new policy is export-facing: A newly announced nuclear policy looks to build up to 10 more reactors in Canada, and is focused on working with other countries on building their nuclear capacity.
4. Small modular reactors are the proposed next step: Powering the full electrification of India’s railway system has been floated as an application for small modular reactors.

What does the trade track now involve?

1. A dated target: The CEPA is targeted for conclusion by the end of the year, with both Prime Ministers having repeatedly committed to it.
2. The record it is measured against: The previous attempt at a bilateral trade agreement ran 12 years without getting far. Canada concluded a comparable agreement with the United Arab Emirates in 47 days.
3. A trade volume commitment: The two Prime Ministers committed to double bilateral trade by 2030. Current trade is described as nowhere near where it should be.
4. A business delegation follows: A large Canadian trade delegation is due in India in October.

What is the defence and maritime component?

1. A partnership already announced: A maritime security partnership was announced in March, covering defence material cooperation. The joint statement provides for a defence dialogue between the two governments.
2. An information-sharing framework is being negotiated: A joint security of information agreement is under work, to give companies on both sides a framework for handling sensitive information.
3. The procurement number is large: About $180 billion of Canada’s $500 billion defence outlay to 2035 is procurement, with the remainder on dual-use infrastructure.
4. Canada’s constraint is scale, not technology: A population of 42 million cannot absorb the cost of defence products alone, and Canada has agreed with European partners to develop 12 submarines. Its stated specialisations include optics, driven by rising access to the Arctic.

What is the state of the student and visa channel?

1. The numbers are substantial: There are 400,000 Indian students in Canada, alongside a diaspora of almost two million people.
2. Caps were a housing response: Study permit caps were imposed because intake outran available housing. Some colleges were found to be delivering no real education.
3. Reputation is the cost being carried: The tightening left a perception in India that Canada had closed itself to students. The visa system is under review to correct processing.

Why is Canada turning to India now?

1. Trade talks with the United States have collapsed: Canada walked away from the negotiation over demands it judged to lie beyond normal trade talks, including impositions on its cultural sovereignty. Tariffs are being imposed dollar for dollar in response.
2. Diversification is stated as the primary plan: Canada describes building its own economy and external partnerships as plan A rather than a fallback. Investment is being directed into domestic resources and capacity.
3. China remains the larger relationship: Canada’s economic relationship with China is bigger than the one with India and has been put back on an even keel. It is described as different in quality and character from the Indian relationship.

Challenges to the India-Canada reset

1. The criminal case is still live: A finding in the Canadian courts on the 2023 killing can reopen the political dispute the reset was built to contain. Eg. The allegation in October 2023 produced tit-for-tat expulsions and the withdrawal of most Canadian diplomats from India.
   The Fix: Keep the security dialogue and the economic track under separate institutional mandates, so a judicial outcome suspends neither.
2. Distance works against Canadian energy: Freight cost and voyage time from the Pacific coast disadvantage Canadian cargoes against short-haul Gulf suppliers. Eg. Iraq, Saudi Arabia and the United Arab Emirates supply the bulk of India’s crude on far shorter sea routes.
   The Fix: Anchor Canadian supply in long-term contracts and upstream equity rather than spot cargoes, so volume rather than delivered price carries the relationship.
3. Nuclear liability law blocks reactor sales: Foreign vendors have resisted India’s supplier recourse provision, which is why cooperation has stayed at the fuel supply stage. Eg. Section 17(b) of the Civil Liability for Nuclear Damage Act, 2010 has held up foreign reactor contracts for over a decade.
   The Fix: Settle supplier recourse terms in a bilateral protocol before any reactor negotiation opens.
4. Critical mineral reserves are not supply: Reserves without processing capacity cannot displace the existing source of refined material. Eg. China refines the majority of the world’s rare earths and graphite.
   The Fix: Co-invest in Canadian separation and refining plants under a shared offtake agreement, rather than contracting for unmined ore.

Conclusion

The relationship is being rebuilt instrument by instrument rather than by settling what broke it. That design holds only as long as both governments treat the court’s eventual finding as a legal outcome and not a diplomatic one. Everything else listed so far is either a contract or an announcement. The trade agreement is the first thing the two governments have set themselves to close, and whether they close it is the marker to watch.

Back2Basics

1. CANDU reactor: Short for CANada Deuterium Uranium, a pressurised heavy water reactor design developed in Canada.
2. Fuel and moderator: It runs on natural uranium and uses heavy water as both moderator and coolant, so it needs no uranium enrichment.
3. On-power refuelling: Fuel bundles are replaced while the reactor is running, which raises availability and removes the need for shutdown refuelling.
4. The Indian link: India’s pressurised heavy water reactor programme began with Rajasthan Atomic Power Station Unit 1, built with Canadian collaboration and commissioned in 1973.

[2019, GS2, 15 marks] “What introduces friction into the ties between India and the United States is that Washington is still unable to find for India a position in its global strategy, which would satisfy India’s National self-esteem and ambitions” Explain with suitable examples.