Why Canada is choosing India in a fractured West

Earlier this year, Canadian Prime Minister Mark Carney began his address at the World Economic Forum in Davos with an unlikely protagonist: a Czech greengrocer. The story came from The Power of the Powerless, a 1978 dissident essay by author and former Czech president Václav Havel. Carney recalled a greengrocer who places a sign in his shop window every day that reads, “workers of the world unite”, not because he believes in it, but because removing it could invite friction, even a rupture, with the powerful system around him.

Carney, who was then barely ten months in office, used the story to explain a world in rupture and why Canada could no longer depend on the assumptions that had long defined its relationship with the United States. With President Donald Trump threatening to make Canada the 51st state and disrupting trade ties, Carney was ready for a reset. “We are taking the sign off the window…. We believe that from the fracture, we can build something bigger, better, stronger, more just,” he said. “This is the task of the middle powers, the countries that have the most to lose from a world of fortresses and most to gain from genuine cooperation.”

As Carney spoke, the Indian contingent at Davos was all ears. Barely two months later, Carney was in New Delhi, placing the India-Canada reset in the broader context of a world undergoing change. “Like India, Canada sees a world undergoing profound transformation,” he told Prime Minister Narendra Modi. “And like India, we recognise that the multilateral system—which our two countries have long relied on—is ill-suited to meet the challenges we are facing today.”

Trump’s complaints about Canada’s so-called “free ride” on trade, tariffs on Canadian goods and challenges to Ottawa’s sovereignty pointed to a rupture in the wider international order and a break within the west itself. Yet Ottawa is not looking to replace Washington, which remains by far its most important strategic and economic partner. Carney’s answer lies in diversification, with India emerging as a prominent part of that strategy. “What has happened because of the US bullying and the change in the 51st state narrative is that Canada is doing what Carney has called the middle power diversification to countries like China, India, Indonesia, Vietnam and even becoming an associate member of Europe,” said Ajay Bisaria, former high commissioner of India to Canada.

The India-Canada relationship had survived a dramatic deterioration and deep distrust after Canada’s 2023 allegations concerning the killing of Khalistani activist Hardeep Singh Nijjar. “For 18 months, the relationship had tumbled to big lows in [former prime minister Justin] Trudeau’s time, ever since he made the accusation about transnational repression in September 2023,” said Bisaria. He attributes the change more bluntly to the “Trump accelerator” effect.

According to Jonathan Berkshire Miller, director of foreign affairs, national defence and national security at the Ottawa-based Macdonald-Laurier Institute, the Canadian government has adopted a “two-track” approach: intensifying diplomatic and economic co-operation while maintaining practical co-operation in national security and law enforcement. The defence department and law enforcement agencies are discussing how to separate areas where co-operation is feasible from those where significant differences remain. “In addition, the larger strategic implications are that India fits logically into Carney’s evolving vision of a diversified and resilient Canadian economy,” said Miller.

With security issues once again being left to the concerned establishments, Modi and Carney have focused on the more tangible outcomes of the partnership. By December, they may seal the most important one: the Comprehensive Economic Partnership Agreement, with both countries hoping to take their standing as rising middle powers a notch higher. “The biggest Canadian team is visiting Mumbai and Bengaluru this month, which will lead to the CEPA being signed most likely at the Modi-Carney meeting, the fourth in the last one year,” said Bisaria.

The CEPA would cover trade in goods and services, foreign direct investment, agriculture and agri-foods, digital trade and international mobility. “Additionally, the Canadian government has re-established the bilateral CEO forum and launched a finance ministers’ dialogue regarding the economic and financial aspects of the relationship,” said Miller. He added that Canada planned to double exports to all non-US markets over the next decade, with India being a significant component of that strategy. “There are several areas where complementary capabilities exist, including critical minerals, energy, agriculture, digital infrastructure, artificial intelligence, semiconductors and advanced technologies.”

Economic interests, meanwhile, are reinforcing strategic ones as the global order changes. Experts in Delhi see a fracture within the west and a more multipolar world, with new alignments emerging, including growing convergence between Canada and Europe and a changing approach to the Indo-Pacific. After discussions about associate membership for Canada in the European Union, the two sides are moving ahead with a sweeping new partnership pact at a summit to be held in Montreal by the end of October.

The Indo-Pacific is also becoming increasingly central to Canada’s efforts to build relationships beyond North America. While the US may be dialling back its engagement in the region, Canada’s 2022 Indo-Pacific strategy identified India as a critical partner and China as a strategic challenge. “Even though Canada is not an important military power in the Pacific, greater Canadian engagement in the Indo-Pacific creates another avenue for co-operation,” said Bisaria.

Canada may simultaneously seek to improve relations with China, but its continuing hesitation could give India an edge and make the reset more durable. As Delhi increasingly steps out of the shadow of the western system, it could emerge as Ottawa’s most important new partner in a strategy of diversification.