Canada and India Reset Relations with Major Energy Partnership
In a significant diplomatic and economic development, Canada and India have announced plans to substantially expand their energy trade relationship. This move comes as the two nations work to thaw previously strained diplomatic ties and relaunch formal energy cooperation mechanisms.
Expanding Traditional Energy Exports
According to a joint statement obtained by Bloomberg News, Canada has committed to increasing shipments of crude oil, liquefied natural gas and liquefied petroleum gas to India. In return, New Delhi will send more refined petroleum products to Canadian markets. This reciprocal arrangement follows a meeting between Canadian Energy Minister Tim Hodgson and Indian Petroleum and Natural Gas Minister Hardeep Singh Puri.
The ministers are scheduled to meet at India Energy Week in Goa, where they will officially relaunch the "ministerial energy dialogue" that had previously served as the primary channel for energy cooperation between the two countries. This mechanism had fallen dormant amid diplomatic tensions following the killing of a Canadian Sikh activist.
Beyond Fossil Fuels: Emerging Energy Technologies
The renewed partnership extends well beyond traditional energy sources. Both nations have committed to exploring collaboration in several cutting-edge energy sectors, including:
- Hydrogen production and distribution
- Biofuels development
- Battery storage technology
- Critical minerals extraction and processing
- Electricity systems modernization
- Artificial intelligence applications in the energy industry
Additionally, the ministers will work to facilitate greater reciprocal investment in each other's energy sectors, creating new opportunities for Canadian and Indian companies alike.
Strategic Economic Diversification
This renewed push represents one of Prime Minister Mark Carney's major efforts to diversify Canada's export markets at a time of escalating trade tensions with the United States. The initiative reflects the Canadian government's shift toward pragmatic, economy-first diplomacy with major Asian partners.
The relaunch of the energy dialogue signals that both governments see substantial untapped potential and strategic value in strengthening an energy relationship that had been allowed to drift. Prime Minister Carney is expected to visit India in the coming weeks as part of this diplomatic reset, following his and Prime Minister Narendra Modi's agreement in November to restart talks toward a comprehensive economic partnership agreement.
Growing Trade Relationship
Two-way goods trade between Canada and India reached C$13.3 billion (US$9.7 billion) in 2024, and Ottawa believes there is considerable room for growth, particularly in the energy sector. Currently, India accounts for just one percent of Canada's critical minerals exports, highlighting the significant opportunity for expansion.
Several infrastructure developments support this growing trade relationship. Canada began exporting LNG to Asia in June 2025, and its LPG terminals offer relatively short shipping routes to India. Meanwhile, the expansion of the Trans Mountain pipeline has created a direct path for crude shipments to India, though most Canadian barrels destined for the Indian market still move through the U.S. Gulf Coast.
Prime Minister Carney's upcoming India visit will follow his recent trip to Beijing, where he and President Xi Jinping agreed to reduce tariff barriers. This move prompted U.S. President Donald Trump to threaten 100 percent tariffs on Canadian goods if Ottawa "makes a deal with China," though Carney has emphasized that Canada is not seeking a free trade agreement with China.
The Canada-India energy partnership represents a strategic realignment for both nations, combining traditional energy trade with forward-looking collaboration in emerging technologies that will shape the global energy landscape for decades to come.
