India-Canada relations have traditionally been anchored in shared democratic values, Commonwealth connections, and a substantial diaspora presence. With an estimated 1.8 million people of Indian origin living in Canada, the relationship has been characterized by strong people-to-people ties, robust educational exchanges, and growing economic cooperation. The bilateral relationship encompasses multiple dimensions including trade partnerships, cultural exchanges, strategic cooperation, and educational ties that have evolved over decades of diplomatic engagement.
The economic foundation of the relationship has shown impressive growth over the years. In 2023, bilateral trade between the countries reached $9.36 billion, with Indian exports to Canada valued at $5.56 billion and Canadian exports to India at $3.80 billion. Canadian statistics show an even higher figure, reporting total merchandise trade with India at C$12.5 billion in 2023, with Canada’s exports valued at C$5 billion and imports from India at C$7.5 billion. Before the recent diplomatic crisis, both nations were actively pursuing deeper economic integration through trade agreements, with the Early Progress Trade Agreement likely to be finalized in the second half of 2023, and industry estimates suggesting that a Comprehensive Economic Partnership Agreement could boost trade by as much as $6.5 billion, yielding GDP gains of $3.8 billion to $5.9 billion for Canada by 2035.
Education has emerged as a cornerstone of bilateral relations, with India becoming the largest source country for international students in Canada since 2018. This educational partnership has contributed significantly to Canada’s education sector and broader economy, creating lasting connections between the two nations. However, recent policy changes have introduced uncertainty, with Canada announcing plans to reduce student visas by 35 percent in 2024 and an additional 10 percent reduction planned for 2025, which is expected to significantly impact future international student flows from India.
The relationship underwent a dramatic transformation in September 2023 when Canadian Prime Minister Justin Trudeau made unprecedented allegations against India regarding the assassination of Khalistani separatist Hardeep Singh Nijjar in Surrey, British Columbia in June 2023. Without providing substantial evidence, Trudeau accused Indian diplomats of involvement in Nijjar’s murder, marking the beginning of what would become one of the most serious diplomatic crises between the two nations. The Indian government categorically rejected these allegations, setting the stage for escalating tensions that would fundamentally alter the bilateral relationship.
The diplomatic crisis reached its peak in October 2024 when Canada expelled Sanjay Kumar Verma, the Indian High Commissioner to Canada, along with five other diplomats. India retaliated with six expulsions of its own, creating an unprecedented diplomatic standoff. Canada’s foreign affairs department announced that the Indian diplomats and consular officials were being expelled “in relation to a targeted campaign against Canadian citizens by agents linked to the Government of India.” The crisis deepened when Ottawa accused Indian diplomats of being complicit in criminal activities including intimidation, extortion, and murder, while New Delhi rejected these claims and labeled Canada a “safe haven” for extremism and anti-India activities.
The evidence and intelligence sharing became a major point of contention between the two governments. The Indian government maintained that Canada had not provided any evidence to support its allegations, while Canada contended that it had received intelligence from US intelligence agencies. This dispute over evidence and the handling of sensitive intelligence information further complicated efforts to resolve the crisis diplomatically, creating a trust deficit that continues to affect bilateral relations.
The diplomatic tensions have had measurable effects on public opinion in Canada. According to a public opinion poll by the Angus Reid Institute, the proportion of Canadians who want increased trade ties with India has dramatically declined, dropping from 18 percent in 2014 to just 8 percent in 2024. This shift in public sentiment reflects the broader impact of the diplomatic crisis on how Canadians perceive the relationship with India and their government’s handling of the situation.
Despite the severe diplomatic strain, economic ties have shown remarkable resilience. Two-way trade actually increased from C$880 million in March 2023 to C$923 million in March 2024, demonstrating the underlying strength of commercial relationships. Even more telling, in the six months following the Nijjar allegations (October 2023-March 2024), Canadian imports from India rose to more than C$2.74 billion, compared to C$2.71 billion in the six months prior to the allegations (March-August 2023). This suggests that business relationships have continued to function despite the political tensions at the governmental level.
The current state of India-Canada relations can be described as being at an unprecedented low, with the deterioration during 2023-24 leaving a noticeable diplomatic void. The relationship faces significant challenges including a deep trust deficit between governments, ongoing security concerns and allegations of transnational criminal activities, suspended trade negotiations, and potential long-term impacts on educational exchanges. The crisis has also affected Canada’s broader relationship with the Indian diaspora and raised questions about how democratic nations handle allegations of foreign interference.
Looking toward the future, several factors will determine whether the relationship can be restored. There are discussions about potential leadership changes in Canada that could affect relationship dynamics, though any reset would require addressing the fundamental security and political concerns that triggered the crisis. The strong people-to-people connections through the diaspora, continued business relationships, shared strategic interests in the Indo-Pacific region, and potential for collaboration in areas like clean energy and technology provide foundations for eventual reconciliation.
The resolution of this crisis will likely require significant diplomatic efforts from both sides, potentially including third-party mediation and concrete steps to address the underlying issues that have driven the nations apart. Both countries will need to find ways to separate economic cooperation from political disputes while ensuring that legitimate security concerns are addressed through appropriate diplomatic and legal channels. The India-Canada relationship serves as a case study of how quickly decades of cooperation can be undermined by serious allegations and how challenging it can be to rebuild trust once it has been severely damaged in the international arena.