Why in the News
Narendra Modi and Mark Carney announced a 1.9 billion dollar, 10 year uranium supply agreement during bilateral talks in New Delhi, alongside renewed efforts to conclude a Comprehensive Economic Partnership Agreement.
Key Highlights for Prelims
1. Uranium Supply Agreement
- Supplier: Cameco
- Quantity: ~10,000 tonnes
- Duration: 2027 to 2035
- Value: 1.9 billion dollars
- Purpose: Fuel for Indian nuclear power reactors
- Earlier deal: 2,700 tonnes between 2015 and 2020.
2. CEPA Negotiations
- Terms of Reference issued.
- Target: Conclude CEPA within 2026.
- Aim: Double bilateral trade by 2030.
3. Strategic Energy Partnership
- Covers: Uranium supply, Renewable energy, LPG, and Critical and emerging technologies
- Canada to join: International Solar Alliance and Global Biofuel Alliance.
4. Security Cooperation
- Joint Working Group on Counterterrorism to meet soon.
- Focus on violent extremism and organised crime.
Diplomatic Context
- Ties strained after allegations linked to the killing of Hardeep Singh Nijjar.
- India rejected fresh allegations by Canadian agencies.
- Visit aimed at rebuilding “strategic trust”.
| [2020] In India, why are some nuclear reactors kept under “IAEA Safeguards” while others are not?
(a) Some use uranium and others use thorium
(b) Some use imported uranium and others use domestic supplies
(c) Some are operated by foreign enterprises and others are operated by domestic
(d) Some are State-owned and others are privately-owned |
Why in the News
Canadian Prime Minister Mark Carney began a four day official visit to India, aimed at normalising ties and expanding cooperation across trade, energy and emerging technologies.
Key Highlights of the Visit
-
Major Uranium Deal
- Likely signing of a 10 year, US$ 2 billion uranium supply agreement.
- Supports India’s civil nuclear energy requirements.
-
Focus Areas of Cooperation
- Talks expected on:
- Oil and gas
- Environment and climate
- Artificial Intelligence
- Quantum computing
- Education and culture
- Critical minerals
-
Bilateral Talks
- Meeting with Prime Minister Narendra Modi at Hyderabad House.
- Delegation level discussions to review Strategic Partnership.
- India Canada CEOs Forum to be held.
-
Background Context
-
- Visit comes after strained ties following allegations made under former PM Justin Trudeau.
- Seen as a step toward diplomatic reset.
Strategic Significance
- Canada is a key supplier of uranium and critical minerals.
- Large Indian diaspora in Canada strengthens people to people ties.
- Cooperation in AI and quantum aligns with India’s tech ambitions.
- Engagement signals mutual interest in restoring stability in relations.
Prelims Pointers
- India Canada relations upgraded to Strategic Partnership in 2015.
- Canada is a major uranium exporter.
- Hyderabad House is venue for high level diplomatic talks in New Delhi.
- G7 summit held in Kananaskis in 2025 attended by India.
| [2024] The longest border between any two countries in the world is between:
(a) Canada and the United States of America
(b) Chile and Argentina
(c) China and India
(d) Kazakhstan and Russian Federation |
Why in the News?
Canadian Prime Minister Mark Carney’s visit to India signals a diplomatic reset after the 2023 rupture triggered by allegations over Hardeep Singh Nijjar’s killing. The crisis had led to diplomatic expulsions, visa suspension, and stalled trade talks. Restoration of envoys and revival of Comprehensive Economic Partnership Agreement (CEPA) negotiations mark a sharp reversal amid $23+ billion bilateral trade stakes.
How did diplomatic escalation test principles of sovereignty and international law?
- Allegations of Extraterritorial Action: Canada accused Indian agents of involvement in Nijjar’s killing in British Columbia (2023), raising concerns under international law and state sovereignty norms.
- Reciprocal Diplomatic Expulsions: Both countries expelled diplomats, reducing institutional diplomatic engagement.
- Suspension of Visa Services: India temporarily halted visa issuance for Canadians, affecting people-to-people ties.
- Terrorism vs. Political Dissent Debate: India classified Nijjar as a designated terrorist under Unlawful Activities (Prevention) Act, 1967 (UAPA), while Canada treated him as a political activist.
- Institutional Accountability: Canada initiated investigations; India demanded credible evidence before cooperation.
What governance mechanisms enabled bilateral recovery?
- Leadership Change in Canada: Mark Carney’s accession shifted tone toward calibrated engagement.
- Reinstatement of High Commissioners: Diplomatic normalization restored formal communication channels.
- G20 Engagement: Modi-Carney interaction at the 2025 G7 Summit in Canada signaled political willingness for reset.
- Structured Dialogue Restoration: Agreement to revive working groups on trade, security, and mobility.
How significant are trade and economic linkages in sustaining the relationship?
- Goods Trade (2024): $8.98 billion; exports $4.14 billion; imports $4.84 billion.
- Services Trade (2024): $14.22 billion; reflects strong education and IT linkages.
- Strategic Commodities: Canada supplies pulses, potash, uranium; India exports pharmaceuticals, textiles, machinery.
- CEPA Negotiations: Aim to expand trade to $30 billion by 2030.
- Energy Partnership: Canada as a reliable supplier of oil, LNG, and critical minerals.
How does diaspora politics shape foreign policy and domestic security calculations?
- Large Diaspora Presence: Over 1.8 million Indo-Canadians; politically influential in key provinces.
- Khalistan Issue: Small but vocal separatist groups influenced bilateral tensions.
- Balancing Act: Canada must reconcile free speech protections with counter-terror obligations.
- India’s Security Concerns: Cross-border extremism framed as “transnational crime” in bilateral talks.
What role do multilateral and strategic platforms play in normalisation?
- G20 Collaboration: Shared membership necessitates policy coordination.
- Indo-Pacific Strategy: Canada seeks stronger Asia engagement; India remains central.
- Five Eyes Sensitivity: Canada’s intelligence alignment with US, UK, Australia, New Zealand complicated trust dynamics.
- Energy & Climate Cooperation: Clean energy transition, nuclear cooperation under civil nuclear agreement.
What institutional lessons emerge for diplomatic crisis management?
- Crisis Communication Channels: Importance of sustained back-channel diplomacy.
- Legal Evidence Standards: Need for transparent, rule-based investigative cooperation.
- Trade Insulation Mechanisms: Economic negotiations often pause but resume once political clarity returns.
- Diaspora Governance: Foreign policy increasingly intersects with domestic electoral politics.
Conclusion
India-Canada relations underscore how diaspora politics, domestic compulsions, and national security concerns can significantly influence bilateral diplomacy between democracies. The recent reset reflects pragmatic statecraft, economic interdependence, and institutional resilience, but the durability of this rapprochement will depend on credible security cooperation, responsible diaspora management, and sustained political dialogue.
PYQ Relevance
[UPSC 2020] ‘Indian diaspora has a decisive role to play in the politics and economy of America and European Countries’. Comment with examples.
Linkage: The India-Canada diplomatic crisis highlights how diaspora politics can directly influence bilateral relations, domestic electoral calculations, and foreign policy positioning in Western democracies. It demonstrates that the Indian diaspora is not merely an economic asset but also a political actor shaping strategic outcomes and diplomatic tensions.
Introduction
Canada has decided to drop retaliatory tariffs and mirror the U.S. exemptions on goods covered under the United States-Mexico-Canada Agreement (USMCA). This represents a success in preserving tariff-free trade for over 85% of Canada-U.S. commerce. But sector-specific tariffs like the 50% duties on steel and aluminium continue to hurt Canadian industries. The development is crucial, given Canada’s heavy reliance on the U.S. market, with more than 75% of its exports heading south.
Significance of the News
- Tariff Alignment: Canada has chosen to align its tariff exemptions with those of the U.S., signaling a conciliatory move in contrast with earlier retaliatory tariffs.
- First-time Reset: For the first time since retaliatory duties were announced, Canada is rolling them back to match U.S. exemptions under USMCA, a notable policy reversal.
- Trade Dependence: With over 75% of Canadian exports going to the U.S., the stakes are extremely high, making tariff negotiations critical for economic stability.
- Striking Data: 85% of Canada-U.S. trade is still tariff-free, reflecting both success in negotiations and risks if the pact weakens.
What is USMCA?
- USMCA Pact: Signed in 2020, it replaced NAFTA and provides preferential treatment for Canadian and Mexican goods entering the U.S.
- Carve-out Mechanism: Goods shielded under the agreement are protected from punitive tariffs, preserving market access.
- Upcoming Review : The pact is up for review in 2026, adding urgency to Canada’s attempt to preserve smooth trade relations.
How does Canada benefit from this carve-out?
- Preferential Access: Canadian goods remain shielded from most punitive duties.
- Export Stability: With 75% of exports going to the U.S., the pact secures critical market access.
- Low Tariff Burden: U.S. average tariffs on Canadian goods remain among the lowest globally.
What are the challenges despite tariff exemptions?
- 232 Tariffs: The U.S. has imposed sector-specific duties, including 50% tariffs on steel and aluminium, straining Canadian industries.
- Renegotiation Risk: U.S. Commerce Secretary Howard Lutnick has hinted at reopening USMCA talks, creating uncertainty.
- Dependence Dilemma: Canada retains some retaliatory tariffs, but its heavy reliance on U.S. markets weakens bargaining power.
Why is this crucial for North American trade stability
- Export Dependence: More than 75% of Canada’s exports and 80% of Mexico’s exports head to the U.S., underlining their vulnerability.
- Regional Integration: The USMCA has reestablished tariff-free trade for the majority of goods, preventing economic disruption in North America.
- Geopolitical Context: At a time of growing global protectionism, North America’s internal trade pact provides a stabilising force, but also exposes Canada and Mexico to unilateral U.S. decisions.
Conclusion
Canada’s decision to align its tariffs with U.S. exemptions under USMCA reflects both pragmatism and vulnerability. While the pact secures tariff-free trade for the majority of goods, sector-specific tariffs and the looming threat of renegotiation highlight the fragile foundation of North American trade integration. For Canada, the challenge lies in balancing sovereignty with economic dependence, a dilemma increasingly relevant in today’s protectionist world.
Value Addition
|
United States–Mexico–Canada Agreement (USMCA)
Key Features (vs. NAFTA)
- Rules of Origin – Higher thresholds for auto production (75% North American content vs. 62.5% under NAFTA).
- Labour Provisions – Stronger labour standards; Mexico required to reform labour laws.
- Digital Trade – New rules on data flows, e-commerce, and IP rights absent in NAFTA.
- Sunset Clause – Agreement reviewed every 6 years; expires after 16 years unless renewed.
- Agriculture – U.S. gained greater access to Canadian dairy market.
|
PYQ Relevance
[UPSC 2018] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?
Linkage: The USMCA episode shows how U.S. protectionism through sectoral tariffs (like 50% on steel/aluminium) can destabilize even close trade partners like Canada. Such measures reflect the larger global trend of tariff wars and currency leverage, which disrupt supply chains and investment flows. For India, this highlights risks to macroeconomic stability via trade deficits, inflationary pressures, and exchange rate volatility.
Why in the News?
Prime Minister’s upcoming visit to Kananaskis (Canada), Alberta, for the G-7 outreach summit is an important chance for India and Canada to improve their diplomatic relations.
What led to the deterioration of India-Canada relations since 2023?
- Assassination Allegations: Canadian Prime Minister Justin Trudeau publicly alleged that Indian government agents were involved in the assassination of Khalistani activist Hardeep Singh Nijjar on Canadian soil, without providing conclusive evidence.
- Diplomatic Fallout: In response to the allegations, both countries reduced their diplomatic staff to one-third, significantly weakening diplomatic engagement and services.
- Suspension of Key Agreements: Canada suspended negotiations for a Free Trade Agreement (FTA) with India, while India temporarily stopped issuing visas to Canadian citizens, citing security threats to Indian diplomats.
- Naming of Senior Indian Official: The Royal Canadian Mounted Police (RCMP) reportedly named Home Minister Amit Shah in the conspiracy, further escalating tensions and hardening positions on both sides.
- Historical and Diaspora-linked Frictions: The long-standing Khalistan issue and alleged Khalistani extremism in Canada aggravated India’s concerns, especially given the large Indian diaspora and the perceived lack of action by Canadian authorities.
Why is PM Modi’s visit to the G-7 summit in Canada significant for bilateral ties?
- Signals a Diplomatic Reset: Inviting Modi marks a deliberate attempt by Canada to reopen diplomatic channels after relations plummeted following the 2023 Nijjar incident. Eg: Prime Minister Carney’s invitation—despite ongoing tensions—was described as coming at the last-minute, yet with careful back-channel diplomacy to avoid embarrassment.
- Re-emphasizes India’s Global Economic Role: Carney stressed that India is the world’s 5th-largest economy and central to global supply chains. Including India in G-7 discussions underscores its economic and geopolitical relevance. Eg: Carney asserted that India’s presence was essential to dialogues on energy security, critical minerals, AI, and infrastructure.
- Creates a Platform for Sensitive Law Enforcement Dialogue: The G-7 summit provides a high-level platform to initiate the planned law enforcement dialogue, a key mechanism to address the Nijjar case and broader security-related concerns.
Who are the key stakeholders involved in the India-Canada diplomatic reset?
- Prime Minister of India: Represents India at the G-7 and the potential diplomatic outreach.
- Prime Minister Mark Carney: Initiator of the summit invite; key to Canada’s effort to normalize ties.
- Law enforcement agencies: Both sides agreed to a “law enforcement dialogue” to address allegations and threats.
- Diaspora communities: The 1.86 million-strong Indian community in Canada serves as a bridge between the two nations.
- Trade and diplomatic negotiators: Officials working behind the scenes to restore dialogue on trade and diplomacy.
|
How can justice be pursued while maintaining diplomatic respect?
- Facilitate Law Enforcement Dialogue Through Official Channels: Both countries should engage in structured and confidential legal cooperation to address allegations without public confrontation. Eg: Canada and India have agreed to a “law enforcement dialogue” where sensitive issues like the Nijjar caseand threats to Indian diplomats can be discussed respectfully.
- Avoid Public Accusations Before Due Process: Governments must refrain from making unverified public allegations that escalate tensions and damage bilateral trust. Eg: Canada’s public statement in 2023 about Indian involvement in Nijjar’s death, without conclusive evidence, led to a sharp diplomatic fallout.
- Restore Diplomatic Presence to Normal Levels: Reinstating high commissioners and full diplomatic staff enables better communication and prevents misunderstandings during sensitive investigations. Eg: Both countries had reduced their mission strength by two-thirds; restoring these positions is key to pursuing justice without compromising diplomacy.
How can both countries rebuild trust and restart cooperation? (Way forward)
- Resume Diplomatic Engagement and Dialogue Mechanisms: Reinstating high commissioners and activating official dialogues like law enforcement and trade talks will help normalize relations. Eg: The proposed law enforcement dialogue and discussions on restoring trade negotiations signal mutual willingness to rebuild ties.
- Prioritize People-to-People and Economic Links: Focusing on shared interests such as the Indian diaspora, education, and investment cooperation can help overcome political setbacks. Eg: With 1.86 million people of Indian origin in Canada and strong business partnerships, both nations can leverage these ties for renewed cooperation.
Mains PYQ:
[UPSC 2023] Indian diaspora has scaled new heights in the West. Describe its economic and political benefits for India.
Linkage: A Diplomatic Reset at the G-7″ explicitly states that India and Canada are “inextricably bound by their people” and that “over 1.86 million [people of Indian origin] are settled in Canada, but remain connected to India”. Canada is a significant Western country where the Indian diaspora has a strong presence. Therefore, discussing the economic and political benefits for India from its diaspora in the West would directly involve the Canada-India context, including how this diaspora can play a role in improving strained bilateral ties.
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Student Direct Stream visa
Why in the News?
Canada has discontinued the Student Direct Stream (SDS), ending faster processing for students from specific countries, including India.
What is the Student Direct Stream (SDS) Visa?
- The SDS is a fast-track visa processing program introduced by Canada in 2018 to expedite study permits for students from certain countries, including India.
- Under SDS, applicants typically experienced processing times of around 20 days.
- This stream was designed to simplify and speed up the application process for eligible students by requiring proof of financial stability (such as a Guaranteed Investment Certificate) and specific educational documentation.
- The SDS applied to students from 14 countries, including: India, China, Pakistan, Vietnam, Trinidad and Tobago, among others.
- Since its launch, SDS has been popular among Indian students, with a high approval rate for study permits in recent years.
|
Why was SDS discontinued?
- Fair Access: Moving to a single, standardized process aims to provide equal opportunity for all applicants.
- Strengthened Protection: Canada intends to address student vulnerability by improving safeguards in its regular process.
The changes are part of Canada’s broader immigration reforms, which also update financial requirements and study permit caps.
How does the discontinuation affect Indian Students?
Indian students will face:
- Longer Processing Times: Visa approvals may now take longer under the standard process.
- Additional Financial Proof: More financial documentation will be required.
- Post-Graduation Work Permit (PGWP) Changes: New rules from November 1, 2024 may impact work options after graduation.
Note4Students
From UPSC perspective, the following things are important:
Mains level: India-Canada Relations;
Why in the News?
India-Canada relations have reached a historic low after Justin Trudeau’s government accused Indian officials of being involved in “activities that pose a significant threat to public safety,” claims that New Delhi has strongly rejected as “preposterous.”
What specific allegations has Canada made against Indian diplomats?
- Violent Extremism: Canadian authorities claim that agents of the Government of India have been involved in violent extremist activities affecting both countries.
- Involvement in Criminal Activity: The Royal Canadian Mounted Police (RCMP) have accused Indian diplomats and consular officials of being linked to homicides, acts of violence, and the use of organized crime to create a sense of insecurity among the South Asian community in Canada.
- Foreign Interference: Investigations suggest Indian officials leveraged their positions to collect information on certain individuals or groups in Canada, either directly or through proxies. This intelligence was allegedly shared with the Research and Analysis Wing (RAW) in India.
- Threats and Coercion: The allegations include coercion tactics where individuals in Canada were reportedly threatened regarding their immigration status or faced risks to their family members in India.
- Connections with Organized Crime: There are claims that Indian intelligence conveyed information to criminal networks in India, allegedly linked to gangster Lawrence Bishnoi, who is in custody in India. These networks are suspected of intimidating or targeting Canadians of South Asian descent.
- Involvement in Assassinations: The controversy began with the assassination of Khalistani activist Hardeep Singh Nijjar in Surrey, and was further linked to the killing of Sukhdool Singh Gill in Winnipeg. Both incidents allegedly have ties to Indian government directives.
How has India responded to Canada’s accusations?
- Denial of Allegations: India has categorically dismissed the allegations as “absurd” and “preposterous.” Indian authorities have rejected claims of any involvement in criminal activities in Canada or targeting the Sikh community.
- Accusations of Canadian Tolerance for Extremism: New Delhi has countered by accusing Canada of allowing anti-India elements and Khalistani separatist groups to operate freely, impacting India’s sovereignty and security.
- Denial of Diplomatic Cooperation: Reports suggest that while India initially agreed to cooperate with the Canadian investigation, it later denied visas to RCMP officials who intended to share evidence with Indian counterparts.
What actions have both countries taken in retaliation?
- Expulsion of Diplomats: Following Canada’s expulsion of an Indian diplomat, India retaliated by expelling a senior Canadian diplomat, escalating the diplomatic dispute.
- Visa Suspension: In response to the diplomatic tensions, India suspended visa services for Canadian citizens, citing security concerns for Indian diplomatic personnel in Canada.
- Reduced Diplomatic Presence: The crisis has resulted in both nations significantly scaling back their diplomatic staff, affecting consular services and visa issuance.
- Diplomatic Disengagement: India’s foreign minister has hinted at limiting diplomatic interactions with Canada, reflecting the deterioration in bilateral ties.
What are the potential implications of this diplomatic crisis for both sides?
- Bilateral Relations: The row represents a historic low in India-Canada relations. Both nations may experience prolonged diplomatic disengagement, adversely affecting cooperation in trade, education, and defence.
- Economic Impacts: Canada is a significant partner for Indian students and the Punjabi diaspora, which could face disruptions in visa issuance, immigration processes, and consular services.
- Geopolitical Ramifications: The dispute may strain India’s relations with Western allies, including the United States, which has strong ties with both India and Canada.
- Division in Diaspora Communities: The Sikh community in Canada could be further divided, with escalating tensions around pro-Khalistan activities. Allegations against Indian officials may also increase anti-India sentiments among diaspora groups.
Way forward:
- Diplomatic Engagement and De-escalation: Both countries should prioritize diplomatic channels to de-escalate tensions, perhaps through neutral intermediaries or international platforms, ensuring that the crisis does not further damage long-term relations, trade, and people-to-people ties.
- Focused Cooperation on Extremism and Criminal Activity: A joint task force or collaborative investigation involving both nations could be set up to address concerns about violent extremism and criminal activity, fostering transparency and trust, while respecting sovereignty and legal frameworks.
Note4Students
From UPSC perspective, the following things are important:
Prelims level: “Temporary Workers” in Canada;
Mains level: Canada’s Policy of “Reducing” Such Workers' Impact on Indians;
Why in the News?
On Monday, August 26, Canadian PM Justin Trudeau announced that Canada would be “reducing the number of temporary foreign workers in low-wage jobs.”
Who are these “Temporary Workers” in Canada?
Temporary workers in Canada encompass various categories of individuals, including:
- Temporary Work Visa Holders: These individuals come to Canada for a fixed duration, typically two years, to work in low-wage jobs that pay between CAD 13-19 per hour (approximately Rs 800-1,200 per hour).
- International Students: After completing their studies, many international students remain in Canada on work visas for one to three years while applying for Permanent Residency (PR).
- Spouse Open Work Permit Holders: Many international students bring their spouses to Canada, who can work in low-wage jobs under this permit.
- Labour Market Impact Assessment (LMIA) Workers: These workers are hired under LMIA contracts, which allow employers to recruit foreign workers when they cannot find Canadians to fill job openings.
- Humanitarian Arrivals and Youth Program Participants: This category includes individuals arriving through special humanitarian pathways, such as the Canada-Ukraine Authorization for Emergency Travel (CUAET), asylum seekers, and participants in reciprocal youth programs that allow Canadians to work abroad.
How will Canada’s Policy of “Reducing” Such Workers Impact Indians?
- Reduced Opportunities: The restrictions on temporary workers will limit job opportunities for many Indians, particularly students and their spouses, who make up a significant portion of the temporary workforce.
- Impact on International Students: Indians constitute around 40% of Canada’s international student population, with a majority coming from Punjab. The new policy may restrict their ability to transition from temporary work to permanent residency.
- Shift in Immigration Dynamics: The introduction of restrictions emphasizes a policy shift that could deter potential migrants from considering Canada as a destination.
Indians in Canada:
- The Indian community in Canada has grown significantly in recent years. Between 2000 and 2020, the registered Indian population increased from 670,000 to over 1 million.
- As of 2021, there were approximately 1.8 million people of Indian origin in Canada, representing over 5% of the total population.
- Indian students are the largest international student group in Canada, accounting for 20% of all international students in 2021. There were over 319,000 Indian students enrolled in Canadian institutions, contributing approximately US$ 4.9 billion to the Canadian economy in 2021
- Many highly skilled Indian professionals contribute to various sectors, including technology, healthcare, and engineering. In 2022, over 15,000 Indian tech workers moved to Canada, enhancing the labor market with their expertise.
|
Way forward:
- Strengthen Domestic Opportunities: India should focus on creating more job opportunities and enhancing skill development programs within the country to reduce dependency on foreign employment, ensuring that young professionals and students have viable career options at home.
- Bilateral Engagement and Negotiation: Engage in diplomatic discussions with Canada to advocate for the interests of Indian workers and students, seeking to ensure continued access to work and study opportunities under fair and equitable conditions.
Note4Students
From UPSC perspective, the following things are important:
Mains level: Challenges between India and Canada
Why in the news?
A parliamentary committee report in Canada has claimed India as the second-biggest foreign threat to the country’s democracy.
About the Khalistan Movement
- Origins and Objectives: The Khalistan Movement is a separatist movement seeking to create an independent Sikh state called Khalistan in the Punjab region of India.
- Activities in Canada: Canada has a significant Sikh population, and some members support the Khalistan Movement. This has led to tensions between Canadian Sikhs and the Indian government.
- Notable Incident: The murder of Hardeep Singh Nijjar, a pro-Khalistan ideologue, in Surrey, British Columbia, on June 18, 2023, intensified these tensions.
Historical Background
- Canada and India established diplomatic relations in 1947. The relationship was enhanced by personal ties between Indian Prime Minister Jawaharlal Nehru and Canadian Prime Ministers Louis St. Laurent and Lester B. Pearson in the 1940s and 1960s.
- Canada provided significant aid to India under the “Colombo Plan”, including food aid, project financing, and technical assistance. India has been one of the largest recipients of Canadian bilateral aid, amounting to over $3.8 billion CAD.
Recent Developments
- India and Canada have seen significant growth in bilateral trade, reaching $8.16 billion in 2023.
- Canada is home to over 1.2 million people of Indian origin, who are well-integrated into the mainstream and active in politics.
- The two countries have a strategic partnership underpinned by shared values of democracy and pluralism, with regular high-level interactions and long-standing people-to-people ties.
- India and Canada have signed several agreements, including the Air Services Agreement, Extradition Treaty, Mutual Legal Assistance Treaty, and Nuclear Cooperation Agreement.
Challenges
- Interference Allegations: Canada claims that India has expanded its interference efforts beyond countering pro-Khalistani activities to include targeting Canadian politicians, ethnic media, and Indo-Canadian communities.
- Mutual Suspicion: The Canadian Security Intelligence Service has also accused India of being involved in the election process in Canada, a claim denied by India.
- Ethnic and Political Dynamics: The presence of a significant pro-Khalistan population in Canada complicates bilateral relations, with domestic politics in both countries influencing diplomatic interactions.
India’s Stand
- Denial of Allegations: The Indian government has consistently denied allegations of interference in Canadian affairs and the murder of Hardeep Singh Nijjar.
- Counter-Terrorism: India views the Khalistan Movement as a terrorist threat and seeks to counter its activities both domestically and internationally.
- Diplomatic Responses: In response to accusations from Canada, India has taken measures such as suspending visa services and issuing official statements to refute claims of interference.
Way forward:
- Regular Consultations: Establish a framework for regular high-level meetings between Indian and Canadian officials to address mutual concerns and prevent misunderstandings.
- Bilateral Committees: Form joint committees to handle specific issues such as security concerns, immigration, and trade disputes.
Mains question for practice:
Q Discuss the origins and objectives of the Khalistan Movement and analyse the current challenges it poses to bilateral relations between India and Canada. 15M
Note4Students
From UPSC perspective, the following things are important:
Prelims level: Treaty of Friendship
Mains level: India-Bhutan Relations

After over two years of the COVID-19-induced lockdown, Bhutan will open its doors to tourists on September 23 with a new expensive policy for Indians and other foreign tourists.
India-Bhutan Relations: A backgrounder
- India and Bhutan have had long-standing diplomatic, economic and cultural relations
- Bhutan and India relations are governed by a friendship treaty that was renegotiated only in 2007, subjecting the Himalayan nation’s security needs to supervision.
- Treaty of Friendship in 2007, which brought into the India-Bhutan relationship “an element of equality.”
- The Treaty provides for perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens.
What is the Treaty of Friendship?
- On August 8, 1949, Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs.
- India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007.
- The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.
- Under the 2007 India-Bhutan Friendship Treaty, the two sides have agreed to “cooperate closely with each other on issues relating to their national interests.”
- Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other
Various facets of ties
(1) Commercial Relations
- India is Bhutan’s largest trading partner.
- India and Bhutan have signed an Agreement on Trade, Commerce and Transit on in 2016, which provides for a free trade regime between the two countries.
- Tourism is another point of convergence.
(2) Energy Cooperation
- A scheme titled “Comprehensive Scheme for Establishment of Hydro-meteorological and Flood Forecasting Network on rivers Common to India and Bhutan” is in operation.
- The network consists of 32 Hydro-meteorological/ meteorological stations located in Bhutan and being maintained by the Royal Government of Bhutan with funding from India.
- The data received from these stations are utilized in India for formulating flood forecasts.
Significance of Bhutan to India
- Buffer to China: Bhutan is a buffer state between India and China. Bhutan shares a 470 km long border with China.
- Vital connectivity through chicken’s neck: The Chumbi Valley is situated at the tri-junction of Bhutan, India and China and is 500 km away from the “Chicken’s neck” in North Bengal.
- Security in North-East: Bhutan has in the past cooperated with India and helped to flush out militant groups in NE.
- Chinese inroad in Bhutan: China is interested in establishing formal ties with Thimphu, where it does not yet have a diplomatic mission.
China factor in ties: China predates on small neighbours
- Bhutan is strategically important for both India and China. Chinese territorial claims in western Bhutan are close to the Siliguri Corridor.
- Beijing is reportedly insisting on Bhutan establishing trade and diplomatic relations as a quid pro quo for a border settlement.
- Bhutan is currently India’s only neighbour who has stayed away from joining China’s Belt and Road Initiative (BRI), but that may change if India can’t make itself an attractive ally and neighbour.
Why does India need Bhutan?
- Bhutan has always been India’s most trusted ally in South Asia and has often put India’s security at the forefront.
- Come to think of it, in December 2003, Bhutan’s fourth king personally led the army to throw out Indian militants living in Bhutan’s jungles.
- Bhutan was also the only South Asian country besides India not to attend China’s Belt and Road Initiative forum in May 2017.
- In other words, land-locked Bhutan has held its end of the bargain.
Various cooperation developments
- Maitri Initiative: Bhutan is the first country to receive the Covishield vaccines under India’s Vaccine Maitri Initiative.
- Financial connectivity: It has touched new heights through the launch of the RuPay card and the BHIM app.
- Start-Up ecosystem: Both nations successfully linked up the Start-Up systems of our two countries via structured workshops; through the National Knowledge Network & the Druk-REN connection.
- E-Library project: It has opened up new vistas of education and knowledge sharing between two countries.
Irritants in ties
- India has not invested in significantly in Bhutan and other smaller neighbours that modicum of trust which is critical in building genuine goodwill.
- This means not only increasing people-to-people contact but also being sensitive to Bhutan’s desire for a wider engagement beyond India’s borders. This means respecting Bhutan as an equal, sovereign nation-state.
Conclusion
- The Indo-Bhutan friendship is built on shared values and aspirations, trust and mutual respect.
- Bhutan’s foreign policy framework holds the relationship with India as being integral to its national interest.
- The Indian approach to Bhutan has necessarily to be tailored while being sensitive to the growing Bhutanese aspirations of being considered equal.
UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)
Note4Students
From UPSC perspective, the following things are important:
Mains level: Paper 2- India-China relations and increasing convergence
Track 1.5 dialogue
- The third round of India-Canada Track 1.5 Dialogue, comprising senior diplomats, officials and independent experts, will be held on a virtual platform.
- This promising interaction represents a major, deliberate endeavour to boost the bilateral relationship.
Convergence on China issue
- Common challenges of the COVID-19 era accelerated the momentum of bilateral engagement.
- Canada’s travails with China, starting with the arrest of Huawei’s chief financial officer in Canada in December 2018.
- Later, the ‘hostage diplomacy’ practised by Beijing which arrested two Canadian nationals, has caused huge stress in Canada-China relations, turning Canadian public opinion against China.
- This opened the door to a closer relationship with India.
- In this backdrop, developments concerning the Indo-Pacific — strengthening of the Quad and the growing interest of France, Netherlands and Germany to be active players in the region — are of immense relevance to Ottawa.
- The forthcoming dialogue can deepen the India-Canada convergence on this issue.
Principal area’s of bilateral cooperation
- Canada-India merchandise trade exceeded C$10 billion in 2019.
- Canada’s cumulative investment, including foreign direct investment and by Canadian pension funds, is a substantive C$55 billion.
- Addressing virtually the ‘Invest India’ conference in Canada on Prime Minister pointed out that mature Canadian investors have been present in India for many years and assured them that no barriers would come in their way.
- Indian students are increasingly being educated in Canada, and a quarter million of them spent an estimated $5 billion in tuition fees and other expenses last year, a solid contribution to the Canadian economy.
- Of 330,000 new immigrants accepted by Canada last year, 85,000 i.e. nearly 25%, were from India.
- The Indian diaspora in Canada is now 1.6 million-strong, representing over 4% of the country’s total population.
- The principal areas of bilateral cooperation are best defined by five Es: Economy, Energy, Education, Entertainment and Empowerment of women.
- In particular, the digital domain holds immense potential, given Canada’s proven assets in technology — especially its large investment in Artificial Intelligence, innovation and capital resources, and India’s IT achievements, expanding digital payment architecture and policy modernisation.
Conclusion
Divided by geographical distance but united through clear common interests and shared values, India and Canada will begin their steady journey of progress, this time with a laser-like focus on common goals as well.