Aug 28: Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman’s visit to Canada and the US from August 25 to September 2, 2026, has renewed focus on strengthening India–Canada economic and financial ties. During her four-day visit to Canada, the Minister is participating in the inaugural India–Canada Economic and Financial Dialogue with Canadian Finance and National Revenue Minister François-Philippe Champagne.
The dialogue is focusing on macroeconomic developments, financial-sector cooperation, bilateral investment opportunities, and shared international priorities. The engagement comes as India and Canada deepen cooperation across energy, critical minerals, technology, innovation, and resilient supply chains, alongside ongoing negotiations for a Comprehensive Economic Partnership Agreement.
Launched in March 2026, CEPA negotiations reached their third round in July 2026, with both countries aiming to conclude the agreement by the end of 2026. India and Canada have also set an objective of expanding two-way trade in goods and services to USD 50 billion by 2030.
Canada is currently India’s 16th-largest source of foreign direct investment, with cumulative Canadian FDI inflows of approximately USD 4.33 billion between January 2000 and March 2026. Against this backdrop, Rubix Data Sciences has analysed India–Canada goods trade dynamics to assess the scope for strengthening bilateral economic ties and future trade growth.
India’s Exports Rise as Imports Decline
India’s goods exports to Canada increased from USD 3.8 billion in FY2022 to USD 4.7 billion in FY2026registering a 6% CAGR. Despite fluctuations during FY2023–FY2024, exports maintained an upward trajectory, with FY2026 recording 10.6% YoY growthsignalling renewed export momentum.
In contrast, India’s imports from Canada rose from USD 3.1 billion in FY2022 to a peak of USD 4.6 billion in FY2024before declining to USD 3.3 billion in FY2026. Imports contracted sharply by 26.1% YoY in FY2026resulting in only 1% CAGR over FY2022–FY2026.
India’s total goods trade with Canada increased from USD 6.9 billion in FY2022 to USD 8.7 billion in FY2025before moderating to USD 8.0 billion in FY2026an 8.2% YoY decline. Despite the recent moderation, bilateral goods trade recorded a 4% CAGR between FY2022 and FY2026.
The shift in exports and imports has also changed India’s trade position. India moved from a USD 0.7 billion trade deficit in FY2024 and USD 0.2 billion deficit in FY2025 to a USD 1.4 billion trade surplus in FY2026. The reversal was driven by the sharp decline in imports alongside strong export growth, although the surplus reflects import contraction more than a comparable expansion in overall bilateral trade.
Export Basket Shows Growing Focus on Higher-Value Products
India’s export basket to Canada has gradually shifted towards higher-value and manufactured products. Pharmaceuticals emerged as the largest export category, with its share rising from 8% in FY2022 to 11% in FY2026.
Auto components, diamonds, and precious-metal jewellery also gained or maintained their shares, while crustaceans remained broadly stable. The combined share of the top five export products increased from 19% to 23%indicating a modest increase in product concentration and the growing importance of pharmaceuticals and other manufactured or value-added products.
The trend provides a platform for India to further expand its presence in Canada’s healthcare, automotive, and consumer markets.
Imports Shift Towards Pulses, Fertilisers and Strategic Products
India’s import basket from Canada continues to be anchored in agricultural commodities, natural resources, and strategic inputs, although its composition has changed significantly.
Dried leguminous vegetables increased their share from 13% in FY2022 to 19% in FY2026becoming the largest import category. Aircraft and spacecraft rose from 6% to 10%while potassic fertilisers increased from 6% to 8%.
Meanwhile, coal’s share declined sharply from 15% to 8%while copper ores and concentrates remained stable at 4%.
This shift points to lower dependence on coal and the growing importance of pulses, fertilisers, and strategic industrial products, creating opportunities for Canada to strengthen its role in India’s food, agricultural-input, and industrial supply chains.
Potential Opportunities for Indian Exporters
Canada’s retaliatory tariff measures against specified US products could create potential trade-diversion opportunities for Indian exporters, particularly in sectors where Indian suppliers already have an established presence in Canada.
The US imposed a 50% tariff on USD 27.6 billion worth of Canadian goodseffective August 22, 2026. In response, Canada is set to impose 15%, 25%, and 50% counter-tariffs on specified US products from September 8, 2026with individual rates linked to the corresponding US tariff rates.
The measures cover USD 27.6 billion of US imports and focus on sectors including steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.
At the broader HS 2-digit level, India exported an indicative approximately USD 1 billion of products across these focus sectors in FY2026. Machinery and mechanical appliances, articles of iron and steel, electrical machinery and equipment, and iron and steel were among the leading categories.
India’s established export base in machinery, steel, and electrical equipment could provide a platform to potentially capture additional Canadian demand as businesses diversify away from tariff-affected US suppliers. At the same time, India’s limited presence in dairy and pulp and paper points to potential new-market opportunities, although these sectors would require addressing regulatory, tariff, and market-access barriers.
Strengthening the India–Canada Economic Partnership
The evolving trade relationship, ongoing CEPA negotiations, and renewed economic and financial dialogue provide a platform for India and Canada to deepen bilateral economic engagement.
With two-way trade targeted at USD 50 billion by 2030continued cooperation across investment, energy, critical minerals, technology, innovation, financial services, and resilient supply chains could further support the expansion of bilateral economic ties.