After nearly two years of frayed relations and diplomatic deadlock, India and Canada have agreed to reset their bilateral relationship, signaling a new phase of cooperation and mutual understanding. The agreement followed a pivotal meeting between Canadian Prime Minister Mark Carney and Indian Prime Minister Narendra Modi on the sidelines of the G7 Summit in Kananaskis, Canada.

This diplomatic thaw comes in the aftermath of heightened tensions that began in 2023, following allegations by then-Prime Minister Justin Trudeau implicating Indian agents in the assassination of Hardeep Singh Nijjar, a Canadian citizen and Khalistani activist. The ensuing fallout led to the expulsion of diplomats, suspension of trade talks, and a deep chill in people-to-people connections between the two countries.

However, with Mark Carney assuming office in 2025, there has been a noticeable shift in tone and policy. His meeting with Prime Minister Modi was not only symbolic but also a substantive step toward repairing the fractured relationship.

Rebuilding Trust

According to diplomatic sources, the meeting was marked by a frank yet constructive exchange. Both leaders emphasized the importance of mutual respect, non-interference, and a forward-looking approach that serves the interests of their citizens and diaspora communities.

Prime Minister Carney acknowledged India’s security concerns and assured that Canada would take stronger measures to prevent foreign extremist elements from exploiting Canada’s democratic freedoms. At the same time, he reaffirmed Canada’s commitment to protecting civil liberties and freedom of expression within the bounds of law.

In response, Modi expressed readiness to resume high-level dialogue and trade negotiations, provided there is a clear understanding on sensitive security issues. Both nations agreed to reappoint ambassadors and restore full consular services, including student and business visa processing, which had seen significant delays over the past year.

Economic and Strategic Cooperation

The renewed dialogue opens the door for economic cooperation that had stalled. Canada and India had been in negotiations for a Comprehensive Economic Partnership Agreement (CEPA), which was put on hold due to the diplomatic rift. With relations warming, negotiators from both sides are expected to resume discussions by the fall of 2025.

Key sectors identified for immediate collaboration include green technology, critical minerals, education, and healthcare innovation. India, with its rapidly growing economy and tech-savvy workforce, presents a strategic opportunity for Canadian companies looking to diversify their supply chains. In turn, India is eager to leverage Canadian expertise in sustainable development and clean energy.

Immigration and Education

The normalization of ties is especially good news for Indian students and professionals in Canada. India remains the largest source of international students in Canada, and educational institutions in both countries have pushed for more predictable visa and residency policies.

Both leaders acknowledged the role of the Indian diaspora in Canada, which numbers over 1.4 million, and emphasized that people-to-people ties are the foundation of a strong bilateral relationship. Canada has also agreed to expand its recognition of Indian educational credentials in regulated professions—a move that could improve job prospects for new immigrants.

Security Dialogue and Khalistan Concerns

One of the thorniest issues remains Canada’s handling of Khalistani separatist movements. India has long voiced concern over what it sees as Canada’s leniency toward extremist elements that threaten Indian sovereignty.

While Carney has stopped short of criminalizing Khalistani advocacy, he has proposed the establishment of a joint intelligence task force to monitor and counter violent extremism—both online and offline. Modi welcomed the idea, suggesting it could serve as a model for addressing transnational threats without infringing on domestic freedoms.

Both leaders agreed to revive the India-Canada Security Dialogue, last held in 2021, to address intelligence-sharing, cyber threats, and counterterrorism collaboration.

Global Geopolitics and Shared Interests

Geopolitical shifts also played a role in bringing the two nations closer. With tensions escalating in the Indo-Pacific and growing uncertainty around the global supply chain, both Canada and India recognize the need for democratic allies to cooperate more closely.

At the G7, where India was a special invitee, Modi and Carney discussed shared concerns around China’s assertiveness, Russia’s ongoing war in Ukraine, and the climate crisis. They emphasized the importance of multilateralism, the rules-based international order, and a balanced Indo-Pacific strategy.

Looking Ahead

Diplomatic observers say this reset is not just a return to normalcy but a chance to redefine a 21st-century partnership between two diverse democracies. The success of this effort will depend on how both sides navigate lingering trust issues while building on common ground in trade, technology, education, and security.

“Diplomacy is often about timing,” said a former Canadian diplomat to India. “With new leadership in Ottawa and a pragmatic approach in Delhi, this is the right time to start afresh.”

As ambassadors prepare to return to their posts and negotiations resume, both Carney and Modi seem keen to capitalize on this new momentum. While challenges remain, particularly around domestic political pressures and diaspora sensitivities, the recent meeting suggests both countries are willing to move beyond rhetoric and toward results.