Canada-India Ties Reset: Implications for Trade, Investment and Education

India-Canada Diplomatic Reset: Potential for Trade and Investment Growth

Key Highlights:

• India's trade with Canada has remained relatively stable, with a share of 0.75% in FY24 and 0.74% in FY25, after peaking at 0.97% in FY16.
• Portfolio investment from Canada to India has been significant, with a peak of 3.6% in early 2020, and currently standing at 2.6% as of January 2026.
• Foreign Direct Investment (FDI) from Canada to India has improved, with a share of 0.57% in FY24 and FY25, up from 0.42% in FY22.
• Student mobility has been the most dynamic sector, with a peak of 278,000 study permits issued to Indian students in 2023, before falling to 94,605 in 2025.

Trade Ties:

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India's trade with Canada has historically been modest but stable, with a share hovering below 1% for over a decade. Although the share has stabilized around 0.70-0.75% in recent years, a thaw in relations could help lift this ratio closer to the earlier FY16 highs. Both countries are looking to diversify supply chains, which could contribute to increased trade.

Investment Links:

Canada's footprint in India is more visible in portfolio investment, with a significant share of India's total FPI holdings. While this share has moderated from pandemic-era highs, it remains substantial at 2.6% as of January 2026. On the FDI front, Canada's ranking has improved, with inflows rising to $3.86 billion in FY24 and $4.17 billion in FY25.

Student Mobility:

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The number of study permits issued to Indian students by Canada has been the most dynamic sector, with a sharp increase from 31,920 in 2015 to 278,000 in 2023. However, permits fell sharply to 94,605 in 2025. A diplomatic reset could revitalize student mobility, which could be the fastest segment to rebound.