What Mark Carney And Liberals' Victory Means For India-Canada Relationship

Mark Carney and the Liberal Party's victory in the Canadian federal elections has set in motion a potential reset of one of the country's most strained international relationships: with India. Mr Carney, a political newcomer, had recently said, "I'm most useful in a crisis," and his victory signals a possible improvement in the bilateral ties between New Delhi and Ottawa that were frayed significantly under former prime minister Justin Trudeau.

In his campaign, Mr Carney identified rebuilding ties with India as a priority.

"What Canada will be looking to do is to diversify our trading relationships with like-minded countries, and there are opportunities to rebuild the relationship with India. There needs to be a shared sense of values around that commercial relationship, and if I am Prime Minister, I look forward to the opportunity to build that," he had said.

Diplomatic Fallout

India-Canada relations reached their nadir in 2023 following allegations by the Trudeau government implicating "Indian agents" in the killing of Hardeep Singh Nijjar, a Canadian citizen and a Khalistani terrorist, outside a gurdwara in Surrey, British Columbia, in June 2023.

In October 2024, tensions escalated further when Canada expelled six Indian diplomats. India denied any involvement in Nijjar's killing and condemned the accusations as baseless. The fallout led both nations to expel top envoys, freeze trade negotiations, and suspend official visits.

New Delhi had long accused Ottawa of tolerating extremism in Canada's Sikh diaspora. Trudeau's government was seen by Indian officials  as too accommodating of separatist rhetoric and too quick to condemn India publicly. Against this background, Carney's victory is being watched closely in both capitals.

Carney's Vision

Mark Carney, 60, has headed both the Bank of Canada and the Bank of England. His campaign called for national sovereignty and revamping Canada's foreign alliances in light of tariff threats from its closest trading partner, the United States.

Mr Carney described former US President Donald Trump as a threat to Canadian autonomy, famously declaring, "Donald Trump wants to break us so America can own us." In response, he pledged to diversify Canada's trade relationships, specifically naming India as a key partner.

Mr Carney has consistently stated that Canada needs commercial partnerships with shared democratic values, and that India, despite recent frictions, remains an essential partner.

"Different person, different policies, different approach to governing," he said," Mr Carney had told the Toronto Star in a February interview.

Prime Minister Narendra Modi joined other world leaders in congratulating Mr Carney today, adding that he looked forward to unlocking "greater opportunities" for the people of both countries. 

"Congratulations @MarkJCarney on your election as the Prime Minister of Canada and to the Liberal Party on their victory. India and Canada are bound by shared democratic values, a steadfast commitment to the rule of law, and vibrant people-to-people ties. I look forward to working with you to strengthen our partnership and unlock greater opportunities for our people," wrote PM Modi on X. 

Congratulations @MarkJCarney on your election as the Prime Minister of Canada and to the Liberal Party on their victory. India and Canada are bound by shared democratic values, a steadfast commitment to the rule of law, and vibrant people-to-people ties. I look forward to working…

— Narendra Modi (@narendramodi) April 29, 2025

The Diaspora Factor

The Indian government has long maintained that its primary concern is the protection of its sovereignty and territorial integrity. It views support for Khalistani elements abroad, especially in the form of rallies, social media propaganda, and alleged fundraising networks, as a threat to national security. In Trudeau, many saw a leader too unwilling to act on Indian concerns, particularly when Sikh separatists were seen vandalising Hindu temples.

India is one of the largest sources of immigrants to Canada. Overseas Indians and the Indo-Canadian community number nearly 2.8 million as temporary workers, students, or permanent residents. The student population alone, estimated at over 427,000, plays a big role in Canada's education and labour market.

Under Trudeau, relations at the diplomatic level may have frayed, but immigration from India remained high. Mr Carney is expected to maintain this policy track, particularly for skilled professionals, tech workers, and students.

Trade Reboot

One of the casualties of the diplomatic feud was the stalled Comprehensive Economic Partnership Agreement (CEPA) between Canada and India. The trade deal had been under negotiation for years but was shelved following the Nijjar allegations and reciprocal expulsions.

Mr Carney's remarks at least suggest a readiness to revive CEPA.

In 2023, bilateral services trade stood at CAD 13.49 billion. Both governments had previously explored expanding cooperation in AI, fintech, green energy, and higher education. These areas could regain traction under Mr Carney's leadership, especially as both economies look to reduce dependence on China and the US.