India and Canada Push for Faster Investment Treaty Negotiations
India and Canada are preparing to accelerate negotiations on a Bilateral Investment Treaty (BIT), marking another significant step in the renewed economic engagement between the two countries.
The development emerged following the inaugural India–Canada Finance Ministers’ Economic and Financial Dialogue in Toronto, where Indian Finance Minister Nirmala Sitharaman and Canadian Finance and National Revenue Minister François-Philippe Champagne discussed investment, financial-sector cooperation and opportunities to expand commercial ties.
India expressed its readiness to begin negotiations on a bilateral investment treaty at the earliest, while both sides highlighted the importance of creating a more stable and predictable environment for long-term investors.
The discussions come as New Delhi and Ottawa pursue a broader effort to deepen economic ties after a period in which political tensions complicated the bilateral relationship.
Why a Bilateral Investment Treaty Matters
An investment treaty can provide a clearer framework governing investments made by companies and investors from one country in the other.
For businesses, greater regulatory certainty can reduce some of the risks associated with committing capital to overseas markets. For governments, a well-designed agreement can encourage investment while preserving the ability to regulate in legitimate areas of public policy.
The negotiations could therefore become particularly important for Canadian institutional investors already active in India and for Indian companies seeking to expand their presence in Canada.
Canadian pension funds and other institutional investors have developed a substantial presence in India, particularly as the country has expanded infrastructure and attracted long-term global capital.
During the Toronto dialogue, both governments acknowledged the role of institutional investment in strengthening their economic relationship.
CEPA Negotiations Add Momentum to Economic Relationship
The investment treaty is only one part of a much broader economic agenda.
India and Canada are also working toward concluding negotiations on a Comprehensive Economic Partnership Agreement, or CEPA, by the end of 2026.
The proposed trade agreement is intended to improve market access and create additional opportunities for businesses in both countries.
Earlier negotiations have already covered a broad range of sectors, while recent ministerial engagements have demonstrated an effort by both governments to move the process forward more rapidly.
The two governments share an ambition to expand bilateral trade to around CAD 70 billion, equivalent to approximately ₹4.65 lakh crore, by 2030.
Achieving that goal would require not only lower trade barriers but also stronger investment flows, reliable financial connections and greater cooperation between companies.
Digital Payments and UPI Could Become Another Area of Cooperation
The latest discussions went beyond conventional trade and investment.
India and Canada agreed to encourage engagement between regulators, financial institutions and other stakeholders to identify opportunities in cross-border remittances and merchant payments.
The two sides also discussed possibilities for expanding the use of India's Unified Payments Interface, or UPI, in Canada through partnerships with payment service providers.
Such cooperation could have practical implications for businesses, tourists, students and people transferring money between the two countries.
More efficient digital payment infrastructure could potentially reduce transaction friction while supporting smaller companies participating in bilateral commerce.
Critical Minerals Move Higher on the Agenda
Critical minerals have also emerged as a strategic area for India–Canada cooperation.
Both governments have expressed interest in developing more resilient and diversified supply chains, particularly as countries around the world seek secure sources of minerals needed for advanced manufacturing, clean-energy technologies and other strategic industries.
Canada possesses significant natural-resource capabilities, while India's rapidly expanding industrial and technology sectors are creating growing demand for critical inputs.
A stronger partnership could therefore create commercial opportunities for companies operating across mining, processing, manufacturing and related infrastructure.
Investment Relationship Offers Significant Potential
The economic relationship between India and Canada extends beyond merchandise trade.
Official Canadian figures show that two-way merchandise trade reached CAD 13.6 billion in 2025. Canadian merchandise exports to India were valued at CAD 3.9 billion, while imports from India reached CAD 9.7 billion.
The composition of that trade also highlights the complementary nature of parts of the two economies.
Canada exports products including vegetables, mineral fuels and oils, and wood pulp to India. Imports from India include precious stones and metals, machinery and pharmaceutical products.
Meanwhile, investment links and services — including education-related activity — add another important dimension to the relationship.
Economic Cooperation Follows Broader Diplomatic Reset
The renewed investment push carries significance beyond its immediate commercial impact.
India–Canada relations experienced serious political strains in previous years. More recent high-level engagement has focused on rebuilding channels of communication while expanding cooperation in areas where the two countries share economic interests.
Prime Minister Narendra Modi and Canadian Prime Minister Mark Carney committed earlier in 2026 to strengthening economic and financial cooperation.
Subsequent ministerial visits and trade negotiations have helped translate that political commitment into more concrete economic discussions.
The investment treaty initiative can therefore be viewed as another indicator that economic engagement is becoming an important pillar of the evolving bilateral relationship.
Challenges Could Still Complicate Negotiations
Despite the renewed momentum, reaching comprehensive agreements will require difficult negotiations.
Investment treaties typically involve sensitive questions surrounding investor protections, regulatory powers, dispute-resolution mechanisms and the responsibilities of foreign investors.
The broader CEPA negotiations also involve complicated issues such as agricultural market access, tariffs, regulatory standards and non-tariff barriers.
Canadian consultations on the proposed trade agreement have additionally revealed differing views among stakeholders, with supporters highlighting opportunities in areas such as agriculture, clean energy and services while critics have raised concerns involving regulatory standards, domestic industries and broader political issues.
Both governments will therefore need to balance commercial ambition with domestic economic and regulatory priorities.
What Happens Next?
Attention will now turn to how quickly formal investment treaty negotiations can advance.
The two governments are simultaneously pursuing an ambitious trade timetable, with CEPA negotiations targeted for completion by the end of 2026.
If progress continues on both tracks, India and Canada could establish a considerably stronger framework for trade and investment, potentially giving companies greater confidence to pursue long-term opportunities in each other's markets.
However, the eventual impact will depend heavily on the final provisions of the agreements rather than simply the speed at which negotiations are completed.
For now, the decision to accelerate investment discussions represents another important step in the economic rapprochement between New Delhi and Ottawa.
This article is based on reporting published by The Economic Times.
