Mark Carney’s ascension to the position of 24th Prime Minister of Canada in March 2025, following a decisive Liberal victory, has ushered in a new era of the country’s foreign policy, particularly in its relationship with India, which have hitherto been strained.
Carney, an economist of international acclaim and the former governor of the Bank of Canada and the Bank of England, brings a pragmatic, trade-focused approach to governance, distinct from that of his predecessor, Justin Trudeau, whose tenure was marked by ideological tensions.
Carney’s leadership coincided with significant external pressures on the country, notably from the US that reflect in the exorbitant excise duty imposed under President Donald Trump as reciprocal tariff that have pushed Canada to diversify its trade partnerships.
Additionally, the diminished influence of Jagmeet Singh and the New Democratic Party (NDP), whose pro-Khalistan stance had complicated the country’s ties with India during the Trudeau regime, provides Carney greater freedom to reset the bilateral ties.
India and Canada had always enjoyed cooperation in areas like education, technology, and energy and in 2023, the bilateral trade between the two countries amounted to 13.49 billion Canadian dollars.
Sikh separatists as a bone of contention
Unfortunately, after the assassination of Hardeep Singh Nijjar, a Sikh separatist leader who was wanted in India, for years, the relations between the two countries soured with then prime minister of Canada Justin Trudeau accusing India of being the mastermind of the murder without any evidence to support his claim. What’s more, the recalcitrant leadership stuck to its stand despite India vehement dismissal of the allegations as “absurd”.
Hence, the damage was done, and its diplomatic fallout was immense with both the countries expelling each other’s diplomats and halting negotiations for the Comprehensive Economic Partnership Agreement (CEPA). It was way back in 2010 that the two countries implemented free trade agreements in areas like intellectual property, e-commerce, environment, etc.
Trudeau’s reliance on the NDP, led by Jagmeet Singh – a vocal advocate of Sikh rights who has been perceived by India as sympathetic to Khalistan separatists – further exacerbated tensions. India repeatedly accused Canada of providing a platform to “anti-India” elements, citing events like the 2018 Toronto parade glorifying Sikh militants and the 2023 vandalism of a Hindu temple in Brampton.
The NDP’s influence, particularly through Singh’s coalition support for Trudeau’s minority government, constrained Canada’s ability to address India’s concerns without alienating domestic Sikh voters, who number over 770,000 and hold a significant sway in ridings in British Columbia and Ontario.
However, Carney’s election, following Trudeau’s resignation in January 2025 amid domestic unpopularity, US trade pressures, and the NDP’s electoral defeat, changed this dynamic. Singh’s resignation as NDP leader in April 2025, following the party’s loss of seats, has significantly reduced the political leverage of pro-Khalistan voices, giving the incumbent a free hand to pursue cordial relations with India.
Changing dynamics of India-Canada ties
Carney’s attempt at thaw in relations between the two countries can be gauged from the fact that Prime Minister Modi was invited by him at the G7 Summit held in Kananaskis, Alberta, in June 2025, despite protests from Sikh advocacy groups, underscored his intent to prioritize diplomacy over domestic political pressures. Some of his own Liberal party colleagues too had objected to Modi’s invite but Carney had stood his ground.
Unlike Trudeau, Carney is under no obligation to court NDP support, allowing him to adopt a more neutral stance on the Khalistan issue. India has long demanded that Canada curb what it perceives as extremist activities of pro-Khalistan groups, such as Sikhs for Justice, which has been banned in India since 2019.
Carney’s government has signaled a willingness to address these concerns, with Foreign Minister Mélanie Joly stating in May 2025 that Canada would “uphold the rule of law while fostering international cooperation”. This includes increased monitoring of separatist activities and a commitment to prevent the glorification of terrorism, aligning with India’s expectations.
It was during the Carney–Modi conversation that renewal of CEPA negotiations, which had stalled in 2023, was announced. According to media reports, both the countries are exploring an interim trade deal which focuses on various areas of trade.
Carney’s experience at Brookfield Asset Management, where he oversaw $30 billion in investments in India’s infrastructure and renewable energy sectors, positions him to navigate these talks effectively. India’s interest in Canadian energy exports, such as liquefied natural gas, and Canada’s need for India’s expertise in IT and pharmaceuticals offer mutual incentives for cooperation.
Many observers are of the view that Carney’s stance on India might sideline Liberal party’s Sikh vote bank. However, community insiders say they have never been happy with Trudeau’s pro-Khalistan rhetoric. Kulwinder Cheema, who has lived in Canada for most of his life, says, “Trudeau painted all Sikhs with the same brush. Most Sikhs are peace loving people who have nothing to do with Khalistan.
They are just a handful of them trying to revive a dead issue. Many of us ask that if Khalistan is created, will these advocates go and live there. None of them will. So, why misguide our youth and indulge in violence in the name of Khalistan and malign our reputation?”
Way forward
While it is the push from President Trump’s tariff threats or the change in leadership, challenges to overcome have to jump many hoops and challenges still remain before the relations between the countries can reach pre 2023 levels. The unsolved mystery of Nijjar’s murder is a sticking point. Further, India may also demand stronger action against pro-Khalistan groups, such as banning organizations or curbing public demonstrations, which could prove a test of Canada’s commitment to free expression.
However, it cannot be ignored that the US tariffs that incentivize Canada-India cooperation also strain Canada’s resources, which might slow the progress on CEPA or other bilateral initiatives. India too has its own strategic priorities, and focus on domestic growth, which may limit concessions, requiring both countries to carefully balance economic with diplomatic goals.
Anyway, progress has been made and two the countries are now focussed on improvement by balancing Canada’s commitment to justice with strategic engagement with India. It is expected that both Carney and Modi can rebuild a relationship that leverages economic and cultural synergies, fostering a stronger partnership in a volatile global landscape.