Canadian Prime Minister Mark Carney is heading to India for what experts say is a “very important trip” as he tries to bring back relations between the two countries and find new markets for Canadian exports.
While the trip, which starts Friday, is expected to be heavy on diplomacy, experts question whether it will result in major economic deals to shore up Canada’s economy.
Carney has pledged to broaden the country’s trading partners as relations with its neighbour, the United States, fray. And India, with its 1.4 billion people, is a potentially large market for Canada’s vast petroleum and natural gas reserves, among other products.
But to build those economic bonds will require Carney to overcome diplomatic tensions and hesitancy about the costs of its exports, according to analysts.
“Canada domestically needs to figure out to what extent it wants to grow its oil and gas industry,” said Tarun Khanna, professor at the University of British Columbia who focuses on energy policy.
“Improvement in the overall relationship can provide incentives to both nations.”
Repairing a diplomatic rupture
Part of the hurdle for Carney is repairing recent diplomatic strains between his country and India.
The two countries engaged in a prolonged diplomatic freeze in September 2023, after Carney’s predecessor Justin Trudeau alleged that India was involved in the killing of a Sikh separatist activist on Canadian soil.
India rejected the allegations as false, and both countries expelled each other’s diplomats.
A breakthrough came last year when Carney invited Indian Prime Minister Narendra Modi to Kananaskis, Alberta, to attend the Group of Seven (G7) leaders’ summit in June.
Since then, relations have thawed. In September, both sides named new diplomats to serve as high commissioners to each other’s countries.
In the lead-up to this week’s meeting, more bilateral collaboration has unfolded. Officials from India and Canada have engaged in senior ministerial and working-level engagements in areas such as artificial intelligence (AI), liquefied natural gas (LNG), critical minerals and supply chain resilience.
“This is a very significant visit and allows Prime Minister Carney to consolidate a reset that began in the relationship last year,” said Vina Nadjibulla, vice president at the Asia Pacific Foundation of Canada, a research institute.
Finding alternative trading partners
But the rapprochement with India also comes in a transition period for Canada.
The US has long been its primary trading partner: It is the only country it shares a border with. But since the return of President Donald Trump to the White House, the US has taken an aggressive stance towards trade with Canada.
Trump has stacked steep tariffs on key Canadian exports like steel, aluminium and automobile parts. He also suggested he would like Canada to cede its sovereignty and become a state within the US.
Carney has resisted such efforts, including by imposing counter-tariffs on US goods.
But in January, he gave a speech at the World Economic Forum in Davos, Switzerland, where he outlined his vision for “middle-power” states to break from the superpowers that seek their “subordination”.
“From the fracture, we can build something bigger, better, stronger, more just,” Carney said.
“This is the task of the middle powers: the countries that have the most to lose from a world of fortresses and the most to gain from genuine cooperation.”
Carney’s trip to India, followed by Australia and Japan, is his first major trip to Asia following his Davos speech. Experts say the outing will give him a stage on which to spread his appeal for “genuine cooperation” among smaller economies.
“It allows him to take that message of middle-power diplomacy to India, Australia and Japan, the three most significant for Canada in the Indo-Pacific region,” said Nadjibulla.
The trip also comes at a time when, on the domestic front, Carney’s top priority is to strengthen economic resilience, make sure investments keep flowing into Canada, and protect industries that have been hit by Trump’s tariffs.
As part of that push, Carney visited China last month, becoming the first Canadian prime minister to do so in almost a decade.
A market for Canadian energy
Carney’s latest trip is expected to yield announcements on Canadian exports of oil, natural gas, uranium and critical minerals, as well as cooperation with India on developing nuclear power as a clean energy source.
The outreach effort is “part of Carney’s strategy” to diversify its economic trading partners and find new markets for its products, according to MV Ramana, an expert in energy and security at the University of British Columbia.
Canada is the fourth-largest exporter of crude oil in the world, and the fifth-largest oil producer overall. Its crude exports were valued at more than $100.7bn in 2024 alone.
But Ramana believes that negotiations will also centre on Canada’s uranium. The North American country is the world’s second-largest producer of the metal, which is key to nuclear power production.
“Canada is trying to position itself as an exporter, a petro-state of sorts — not just for oil and gas, but also critical minerals and uranium,” Ramana said.
India has a long history of nuclear cooperation with Canada, which provided it with a research reactor in the 1950s for its nascent nuclear programme.
It has continued to import uranium from Canada, and the two countries are in the midst of finalising a 10-year, $2.8bn deal that would ensure a supply of the metal to India.
Given that backdrop, Ramana said he expects to see announcements on small modular reactors for nuclear energy, even though there are currently only a few operating in Russia and China.
The first in North America — the Darlington New Nuclear Project — is in the works in Ontario, and Carney appears to be angling for Canada to become a leader in such small-scale reactors. But it won’t be easy, warned Ramana.
“These are supposed to be cheaper, but they also produce far less power. As a result, the cost per unit of power generation will be much higher,” he said.
Another complication is the fact that the licence for the modular reactor design is owned by a US company.
That means the US will need to be involved, said Ramana, a tricky balance as Carney continues to be in the crosshairs of Trump.
‘Combination of price and strategic decision’
With the largest population in the world, India’s already-huge energy demands are expected to keep increasing.
Khanna, the energy policy expert, said that means there is likely to be negotiation about fossil fuels as well during Carney’s trip.
“We don’t know what will materialise, but given the Indian energy situation, oil and gas is one thing that will be on the table,” said Khanna.
But India has also faced backlash under Trump about where it sources its energy supply from.
In August, the US president slapped an additional 25 percent tariff on India, doubling his tariffs on the South Asian nation to 50 percent, as a penalty for its import of Russian oil.
That was finally rolled back this month, and US tariffs on India were brought down to 18 percent, though that rate, among others, was overturned by a decision from the US Supreme Court.
Now, the current US tariffs on Indian imports sit at 10 percent. But experts have warned that Trump’s tariff policies have sown uncertainty among the US’s trading partners, including India.
So New Delhi is looking to secure its oil supplies, and Canada is looking for new buyers, Khanna said. But price will ultimately be the key.
“India is a price-sensitive market, so the Indian side will be looking for deals that secure supplies but at a reasonable price,” he pointed out.
If Ottawa seeks to increase its market, “then it’s up to them to see what kind of incentives they can hand out”, Khanna added.
For India to sign a deal, “it will have to be a combination of price and strategic decision”.
*Aljazeera*
