Canadian Prime Minister Mark Carney is heading to India for what consultants say is a “very important journey” as he tries to reset relations between the 2 nations and discover new markets for Canadian exports.
Whereas the journey, which begins Friday, is predicted to be heavy on diplomacy, consultants query whether or not it is going to lead to main financial offers to shore up Canada’s financial system.
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Carney has pledged to broaden the nation’s buying and selling companions as relations with its neighbour, the USA, fray. And India, with its 1.4 billion individuals, is a probably massive marketplace for Canada’s huge petroleum and pure gasoline reserves, amongst different merchandise.
However to construct these financial bonds would require Carney to beat diplomatic tensions and hesitancy concerning the prices of its exports, in response to analysts.
“Canada domestically wants to determine to what extent it desires to develop its oil and gasoline trade,” mentioned Tarun Khanna, professor on the College of British Columbia who focuses on vitality coverage.
“Enchancment within the total relationship can present incentives to each nations.”
Repairing a diplomatic rupture
A part of the hurdle for Carney is repairing latest diplomatic strains between his nation and India.
The 2 nations engaged in a chronic diplomatic freeze in September 2023, after Carney’s predecessor Justin Trudeau alleged that India was concerned within the killing of a Sikh separatist activist on Canadian soil.
India rejected the allegations as false, and each nations expelled one another’s diplomats.
A breakthrough got here final 12 months 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, either side named new diplomats to function excessive commissioners to one another’s nations.
Within the lead-up to this week’s assembly, extra bilateral collaboration has unfolded. Officers from India and Canada have engaged in senior ministerial and working-level engagements in areas corresponding to synthetic intelligence (AI), liquefied pure gasoline (LNG), essential minerals and provide chain resilience.
“This can be a very important go to and permits Prime Minister Carney to consolidate a reset that started within the relationship final 12 months,” mentioned Vina Nadjibulla, vice chairman on the Asia Pacific Basis of Canada, a analysis institute.
Discovering different buying and selling companions
However the rapprochement with India additionally is available in a transition interval for Canada.
The US has lengthy been its major buying and selling accomplice: It’s the solely nation it shares a border with. However because the return of President Donald Trump to the White Home, the US has taken an aggressive stance in direction of commerce with Canada.
Trump has stacked steep tariffs on key Canadian exports like metal, aluminium and vehicle elements. He additionally steered he would really like Canada to cede its sovereignty and grow to be a state inside the US.
Carney has resisted such efforts, together with by imposing counter-tariffs on US items.
However in January, he gave a speech on the World Financial Discussion board in Davos, Switzerland, the place he outlined his imaginative and prescient for “middle-power” states to interrupt from the superpowers that search their “subordination”.
“From the fracture, we will construct one thing greater, higher, stronger, extra simply,” Carney mentioned.
“That is the duty of the center powers: the nations which have probably the most to lose from a world of fortresses and probably the most to realize from real cooperation.”
Carney’s journey to India, adopted by Australia and Japan, is his first main journey to Asia following his Davos speech. Consultants say the outing will give him a stage on which to unfold his enchantment for “real cooperation” amongst smaller economies.
“It permits him to take that message of middle-power diplomacy to India, Australia and Japan, the three most important for Canada within the Indo-Pacific area,” mentioned Nadjibulla.
The journey additionally comes at a time when, on the home entrance, Carney’s prime precedence is to strengthen financial resilience, ensure that investments hold flowing into Canada, and shield industries which were hit by Trump’s tariffs.
As a part of that push, Carney visited China last month, turning into the primary Canadian prime minister to take action in nearly a decade.
A marketplace for Canadian vitality
Carney’s newest journey is predicted to yield bulletins on Canadian exports of oil, pure gasoline, uranium and important minerals, in addition to cooperation with India on growing nuclear energy as a clear vitality supply.
The outreach effort is “a part of Carney’s technique” to diversify its financial buying and selling companions and discover new markets for its merchandise, in response to MV Ramana, an professional in vitality and safety on the College of British Columbia.
Canada is the fourth-largest exporter of crude oil on the earth, and the fifth-largest oil producer total. Its crude exports had been valued at greater than $100.7bn in 2024 alone.
However Ramana believes that negotiations may also centre on Canada’s uranium. The North American nation is the world’s second-largest producer of the metallic, which is vital to nuclear energy manufacturing.
“Canada is attempting to place itself as an exporter, a petro-state of kinds — not only for oil and gasoline, but in addition essential minerals and uranium,” Ramana mentioned.
India has a protracted historical past of nuclear cooperation with Canada, which supplied it with a analysis reactor within the Nineteen Fifties for its nascent nuclear programme.
It has continued to import uranium from Canada, and the 2 nations are within the midst of finalising a 10-year, $2.8bn deal that may guarantee a provide of the metallic to India.
On condition that backdrop, Ramana mentioned he expects to see bulletins on small modular reactors for nuclear vitality, though there are presently just a few working in Russia and China.
The primary in North America — the Darlington New Nuclear Venture — is within the works in Ontario, and Carney seems to be angling for Canada to grow to be a frontrunner in such small-scale reactors. However it gained’t be straightforward, warned Ramana.
“These are alleged to be cheaper, however in addition they produce far much less energy. Consequently, the fee per unit of energy era will likely be a lot larger,” he mentioned.
One other complication is the truth that the licence for the modular reactor design is owned by a US firm.
Meaning the US will must be concerned, mentioned Ramana, a difficult steadiness as Carney continues to be within the crosshairs of Trump.
‘Mixture of worth and strategic determination’
With the biggest inhabitants on the earth, India’s already-huge vitality calls for are anticipated to maintain growing.
Khanna, the vitality coverage professional, mentioned meaning there may be more likely to be negotiation about fossil fuels as properly throughout Carney’s journey.
“We don’t know what is going to materialise, however given the Indian vitality scenario, oil and gasoline is one factor that will likely be on the desk,” mentioned Khanna.
However India has additionally confronted backlash below Trump about the place it sources its vitality provide from.
In August, the US president slapped an extra 25 % tariff on India, doubling his tariffs on the South Asian nation to 50 %, as a penalty for its import of Russian oil.
That was lastly rolled back this month, and US tariffs on India had been introduced all the way down to 18 %, although that price, amongst others, was overturned by a choice from the US Supreme Court docket.
Now, the present US tariffs on Indian imports sit at 10 %. However consultants have warned that Trump’s tariff insurance policies have sown uncertainty among the many US’s buying and selling companions, together with India.
So New Delhi is trying to safe its oil provides, and Canada is in search of new consumers, Khanna mentioned. However worth will finally be the important thing.
“India is a price-sensitive market, so the Indian facet will likely be in search of offers that safe provides however at an inexpensive worth,” he identified.
If Ottawa seeks to extend its market, “then it’s as much as them to see what sort of incentives they’ll hand out”, Khanna added.
For India to signal a deal, “it should be a mix of worth and strategic determination”.
