A reset for India, Canada

The recent G7 summit in Kananaskis, Canada, concluded without dramatic breakthroughs on the world’s most urgent geopolitical challenges, but it offered a rare and valuable diplomatic opportunity: the chance for India and Canada to reset their deeply strained relationship. For nearly two years, relations between the two countries had been caught in a downward spiral following the assassination of Hardeep Singh Nijjar, a Sikh separatist and Canadian citizen whom India had designated a terrorist. The fallout from the June 2023 killing ignited a bitter war of words and diplomatic retaliations. Now, with a new leadership in Ottawa and a changing global environment, both countries seem ready to move forward with cautious pragmatism.

When former Canadian Prime Minister Justin Trudeau alleged in Parliament that there were “credible allegations” of the Indian government’s involvement in Nijjar’s killing, it triggered an unprecedented freeze in bilateral engagement. However, the election of Mark Carney as Canadian Prime Minister in March 2025 marked an inflection point. A seasoned economist and former central banker, Carney brought with him a less confrontational tone and a greater emphasis on restoring Canada’s international relationships.

His invitation to Indian Prime Minister Narendra Modi to attend the G7 Outreach Session in Canada was both a diplomatic signal and a calculated step towards normalisation. The bilateral meeting between the two leaders on the sidelines of the summit didn’t produce headlines, but it did result in key deliverables: the decision to reinstate high commissioners in Ottawa and New Delhi and to restart trade talks and other dialogue mechanisms.

The broader summit itself took place under a cloud of global uncertainty. The prolonged war in Ukraine, ongoing Israel-Iran tensions, a recent flare-up between India and Pakistan following the April 22 Pahalgam terror attack, and economic instability linked to the US’ protectionist policies meant that the G7 meeting was less about grand solutions and more about damage control. The early departure of US President Donald Trump further disrupted momentum, and his remarks – calling for Russia and even China to be considered for G7 membership – clashed with the group’s core identity as an alliance of leading democracies. Amid these distractions, the quiet progress between India and Canada became one of the summit’s most concrete outcomes.

In their meeting, Modi and Carney agreed to resume negotiations on the Early Progress Trade Agreement and reinitiate discussions on a broader Comprehensive Economic Partnership Agreement. They also outlined areas of strategic cooperation, including clean energy, Artificial Intelligence, food security, and critical minerals. The shared economic stakes are substantial. In 2024, bilateral goods trade stood at $8.6 billion, while services trade – particularly in education – topped $14 billion. Indian students constitute the largest group of international learners in Canada, and over 1.8 million Canadians are of Indian origin, with more than a million being non-resident Indians. The people-to-people connection is as significant as the trade numbers.

More disclosures?

Crucially, while both sides are attempting to repair relations, the sensitive issue of the Nijjar killing still casts a shadow. The upcoming release of a Canadian intelligence report on the matter could present fresh challenges. Carney acknowledged the case during a press interaction, calling it a “delicate legal issue” that required careful handling. He stopped short of repeating Trudeau’s past accusations but emphasised the importance of addressing transnational repression and strengthening law enforcement cooperation. While the Nijjar case was not mentioned in the official joint statement, the G7 communique did broadly condemn state-sponsored actions against dissidents abroad, a move that Canada may have used to send a subtle signal.

India continues to reject any suggestion of state involvement in the killing, labelling the earlier claims as politically motivated and lacking credibility. It maintains that Canada has failed to take meaningful action against extremist elements that threaten Indian sovereignty. The Ministry of External Affairs in New Delhi has described both countries as “vibrant democracies” with shared values and emphasised the need to rebuild ties based on mutual respect and sensitivity. This calibrated approach – one that separates long-term interests from immediate political noise – now appears to guide both capitals.

The future of India-Canada ties will depend not just on political will but on the ability to compartmentalise the ongoing legal processes from diplomatic and economic cooperation. If the expected Canadian intelligence disclosures further implicate Indian actors, the situation could again deteriorate. But if both countries stay committed to managing differences through institutional dialogue and mutual restraint, the current thaw could evolve into a durable reset.

(The writer is an associate fellow at the Manohar Parrikar Institute for Defence Studies and Analyses)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.