Key Takeaways:
- Canada plans to increase exports of crude oil and natural gas to India, while buying refined petroleum products in return.
- The two nations aim to strengthen trade ties, with India being the world’s third-largest consumer of oil and fourth-largest LNG importer.
- Canada’s current energy exports are mostly to the United States, but the government wants to diversify and double non-U.S. exports.
- India is looking to diversify its sources of energy, having imported nearly 88% of its crude oil consumption in 2023-24.
- The diplomatic ties between Canada and India have been strained in recent years, but both countries are now trying to pursue economic opportunities while defending their interests.
Introduction to Canada-India Trade Relations
Canada and India are planning to strengthen their trade ties, particularly in the energy sector. The two governments have announced plans to increase exports of crude oil and natural gas from Canada to India, while Canada will buy refined petroleum products from India in return. This move is part of Canada’s efforts to diversify its energy exports, which are currently mostly directed to the United States. Energy and Natural Resources Minister Tim Hodgson met with Indian Petroleum and Natural Gas Minister Hardeep Singh Puri in India, where they discussed the importance of energy security and diversity of supply for the economic vitality of both countries.
Canada’s Energy Exports
Currently, 97% of Canada’s energy exports go to the United States. However, Prime Minister Mark Carney has vowed to double non-U.S. exports, and India is seen as a key market for Canadian energy products. Canada is looking to export more liquefied natural gas (LNG) and crude oil to Asian markets via the Trans Mountain Expansion (TMX) Pipeline. The country is also planning to increase liquefied petroleum gas (LPG) exports to Asia via the west coast of Canada, with India emerging as a major market. According to Statistics Canada, Canada’s total energy exports to India amounted to $761.5 million in 2024, while Canada imported $206 million worth of energy products from India.
India’s Energy Needs
India is the world’s third-largest consumer of oil, fourth-largest LNG importer, and third-largest LPG consumer. The country is looking to diversify its sources of energy, having imported nearly 88% of its crude oil consumption in 2023-24. Most of India’s crude oil imports come from Russia, but the country is looking to reduce its dependence on Russian oil due to EU sanctions. India’s energy needs are expected to increase by 70% by 2040, making it an attractive market for Canadian energy exports. International Trade Minister Maninder Sidhu has said that India is "destined to be the third-largest economy in the world" and is a major target for Canada’s efforts to diversify trade.
Diplomatic Ties Between Canada and India
The diplomatic ties between Canada and India have been strained in recent years due to a murder case involving a Canadian citizen and Sikh activist. However, both countries are now trying to pursue economic opportunities while defending their interests. Canada and India launched talks on a comprehensive trade deal 16 years ago, but the negotiations were downgraded to a sectoral deal after a diplomatic crisis erupted in 2023. The two countries have since reappointed high commissioners, and talks on a comprehensive trade deal have resumed. Minister Sidhu has said that Ottawa is trying to pursue economic opportunities while defending its interests, and that the government is taking a pragmatic approach to its relations with India and other countries.
Conclusion and Future Prospects
In conclusion, the planned increase in energy trade between Canada and India is a significant development in the bilateral relations between the two countries. The move is expected to strengthen trade ties and provide opportunities for economic growth and development. However, the diplomatic ties between the two countries are still fragile, and it remains to be seen how the negotiations on a comprehensive trade deal will progress. Nevertheless, the potential for increased energy trade between Canada and India is significant, and both countries are expected to benefit from the agreement. As Minister Sidhu has said, "We need to find opportunities for Canadians, and that’s our government’s pragmatic approach." With the growing demand for energy in India and the abundance of energy resources in Canada, the future prospects for bilateral trade and cooperation look promising.
