India–Canada Commercial Ties Gain Momentum as Negotiations on CEPA Continue

BENGALURU, Oct 16: India and Canada have taken another step towards strengthening their commercial relationship, with businesses from both countries signing agreements and memoranda of understanding as negotiations continue on a proposed Comprehensive Economic Partnership Agreement (CEPA).

The agreements were signed during a Canada–India business ceremony in Karnataka on Friday, attended by Canada’s Minister of International Trade, Maninder Sidhu. The initiative comes as both governments work towards concluding negotiations on the proposed trade agreement by the end of 2026.

The renewed business engagement signals an effort to expand commercial cooperation and create opportunities for companies seeking access to new markets. Areas identified for collaboration include artificial intelligence, quantum computing, aviation infrastructure, digital innovation, sustainability and smart mobility.

According to India’s Commerce Ministry, the two countries reaffirmed their target for completing negotiations on the trade pact. The fifth round of discussions took place in Ottawa from October 5 to 9, with officials addressing market access for goods and services, investment provisions, rules of origin, intellectual property rights and trade remedies.

The next round of negotiations is scheduled to take place in New Delhi in early November.

Bilateral trade between India and Canada stood at approximately $7.96 billion in the financial year 2025–26, according to government data. Estimates suggest that the proposed agreement could increase bilateral trade by between $4.4 billion and $6.5 billion, while Canada’s gross domestic product could gain between $3.8 billion and $5.9 billion by 2035.

Trade agreement expected to widen market access

A comprehensive economic partnership agreement generally seeks to reduce trade barriers, improve access for goods and services, establish clearer investment rules and provide businesses with a more predictable commercial environment.

For Indian exporters, improved access to Canada could create opportunities in manufacturing, engineering, pharmaceuticals, information technology and other service industries. Canadian companies, meanwhile, could explore a wider range of opportunities in India’s growing consumer market and infrastructure sector.

The potential benefits would depend on the final terms of the agreement, including tariff reductions, eligibility requirements and provisions governing sensitive products.

Rules of origin will be particularly important because they determine whether goods qualify for preferential treatment under a trade pact. Clear provisions can help prevent goods from third countries from receiving benefits intended for businesses operating within the participating economies.

Services and investment provisions could also influence the agreement’s value. Companies operating across borders often need clarity on professional qualifications, regulatory requirements, data-related rules and the treatment of overseas investment.

Negotiators must balance these commercial interests with domestic policy priorities and the need to protect sectors that may face stronger international competition.

The discussions are therefore expected to involve detailed negotiations rather than simply the announcement of a broad political commitment.

Technology emerges as a key area of cooperation

Artificial intelligence and quantum computing have emerged as potential areas for collaboration between Indian and Canadian companies.

India has a large information technology workforce, an established software services industry and a growing digital economy. Canada has expertise in advanced research, technology development and specialised innovation ecosystems.

Closer cooperation could support joint research, software development, commercial applications and the creation of technology products for international markets.

Artificial intelligence is increasingly being adopted across industries to improve productivity, automate processes and support decision-making. Businesses are looking for partners that can combine technical expertise with an understanding of local markets and regulatory requirements.

Indian firms could benefit from access to Canadian research networks and specialised technology capabilities, while Canadian companies could use India’s talent base and commercial scale to expand product development and service delivery.

Quantum computing remains an emerging field, with potential applications in areas such as advanced materials, complex modelling and specialised computing. Its commercial adoption will require continued research, infrastructure investment and collaboration between academic institutions and private companies.

For businesses in both countries, the opportunity lies in turning research and technological capabilities into commercially viable products rather than relying solely on broad investment commitments.

Digital security is another relevant area. As businesses move more operations online, demand for secure communications, data protection and reliable digital infrastructure continues to increase.

Partnerships in cybersecurity and digital systems could help companies address these requirements while opening new opportunities for technology exporters.

Aviation and infrastructure offer investment potential

Aviation infrastructure and transport development were also highlighted during the Canadian trade mission.

India’s expanding aviation market has created demand for airport capacity, passenger facilities, security systems, logistics services and supporting technology. Airport operators and infrastructure companies require long-term investment to accommodate passenger growth and improve operational efficiency.

Canadian businesses already have a presence in areas connected with aviation, transport technology and airport security. Companies such as CAE, Magellan Aerospace, MDA Space, Genetec, Transoft Solutions and RBH Access were cited in discussions about existing commercial links and potential cooperation.

During his visit, Sidhu toured Terminal 2 at Bengaluru airport and referred to its expansion plans as an example of the opportunities available to businesses from both countries.

Canadian firm Fairfax Financial has also invested in airport infrastructure in India, illustrating how overseas capital can participate in large infrastructure projects.

Future collaboration could extend to airport management systems, passenger processing, security technology, aerospace services and transport planning.

Such projects typically require significant capital, technical expertise and compliance with local regulations. Investment decisions are therefore likely to depend on project economics, financing arrangements and the ability of businesses to meet operational requirements.

Canada seeks to diversify export markets

The renewed engagement also forms part of Canada’s broader effort to expand exports beyond its largest traditional market, the United States.

Sidhu said Canada aims to double its exports to markets outside the US over the next decade. India is expected to be an important destination in that strategy because of its population, economic expansion and growing demand for technology, infrastructure and industrial services.

Canadian companies seeking new markets may view India as an opportunity to diversify revenue and establish longer-term commercial partnerships.

India’s demand for transport infrastructure, digital services, sustainable technology and advanced industrial equipment could create opportunities for companies with specialised capabilities.

However, entering a new market can involve challenges, including regulatory differences, competition from established suppliers, local sourcing requirements and the cost of developing distribution networks.

Long-term success will depend on building partnerships with domestic businesses, understanding procurement procedures and adapting products to local requirements.

The trade agreement could help reduce some uncertainties, but it would not eliminate the need for companies to conduct market research and manage commercial risks.

Investment flows and business confidence

The signing of commercial agreements can provide a platform for cooperation, although the practical value of individual memoranda depends on whether they lead to investment, procurement contracts or sustained commercial activity.

Businesses will be looking for evidence that announced partnerships translate into measurable outcomes, including new projects, technology transfers, export orders and employment opportunities.

A completed CEPA could support that process by establishing a more predictable framework for cross-border activity. Investors generally value transparency in trade rules and clarity over how their products and services will be treated in foreign markets.

For Indian businesses, stronger engagement with Canadian companies could provide access to technology, capital and specialised expertise. Canadian firms could benefit from India’s industrial base, skilled workforce and growing demand for commercial services.

The agreement’s final structure will determine how widely these benefits are distributed across sectors and company sizes.

Small and medium-sized enterprises could also gain from improved access to overseas customers, provided they have the resources to meet export standards and manage international operations.

Negotiations face important questions

Although both countries are targeting completion of negotiations by the end of 2026, a deadline does not guarantee that all outstanding issues will be resolved within that period.

Trade negotiations often involve disagreements over tariffs, market access, regulatory standards and the treatment of sensitive industries. The final outcome will depend on whether both sides can reach mutually acceptable terms.

Businesses will also need to distinguish between agreements already signed and benefits that would arise only after a broader trade pact enters into force.

The commercial agreements announced on Friday can support cooperation immediately where their terms permit, while CEPA negotiations continue separately.

The upcoming round in New Delhi will provide another opportunity for officials to address unresolved questions and narrow differences.

Outlook

India and Canada are seeking to build a more extensive economic relationship through business partnerships, technology collaboration and negotiations on a comprehensive trade framework.

The latest agreements demonstrate interest among companies in exploring commercial opportunities, particularly in sectors linked to innovation and infrastructure.

If the proposed CEPA is concluded and implemented effectively, it could improve market access, encourage investment and give businesses greater confidence to develop long-term cross-border operations.

For now, the immediate focus remains on translating the agreements into practical commercial activity and maintaining progress towards the year-end negotiating target.

The pace of future cooperation will depend on the outcome of the trade discussions, the willingness of businesses to invest and the ability of both governments to provide a stable framework for economic engagement.