Geopolitical Risk Mitigation in the Canada-India-China Triangle: Emerging Opportunities in Canadian Infrastructure and Trade Equity

In an era of shifting global alliances and escalating trade tensions, Canada's strategic investments in infrastructure and trade equity within the India-China triangle present both opportunities and risks. As the country seeks to diversify its economic dependencies and navigate complex geopolitical dynamics, its engagement with India—while cautiously balancing relations with China—has become a cornerstone of its 2025 economic strategy.

Canada-India Infrastructure Synergies: A Strategic Diversification Play

Canada's infrastructure investments in India have surged in recent years, driven by the need to offset overreliance on U.S. markets. Canadian pension funds, including the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP), have emerged as pivotal players, financing high-impact projects such as Bangalore's Kempegowda International Airport and the Leela Hotels chainIndia-Canada Trade: Opportunities, Challenges, and the Way Forward^[4]. These investments not only address India's infrastructure deficit but also align with Canada's broader $100 billion Trade Diversification Plan, which prioritizes trade corridors through airports, ports, and railwaysDeepDive: No more half-measures: A $100 billion plan to transform and diversify Canada's trade infrastructure^[5].

The federal government's Canada Infrastructure Bank and Business Development Bank of Canada (BDC) are further amplifying this effort, channeling capital into projects that enhance India's connectivity and logistics capabilities. For instance, the proposed Contrecoeur Terminal Container Project in Quebec and LNG Canada Phase 2 in British Columbia are designed to strengthen Canada's role as a global supplier of critical minerals and clean energy, while simultaneously supporting India's energy transitionManaging Canada-China Relations in a Shifting Geopolitical Reality^[1].

Geopolitical Risks and Diplomatic Challenges

Despite these economic synergies, Canada-India relations have faced turbulence. The 2023-2024 diplomatic crisis, triggered by allegations linking Indian state agents to the murder of Hardeep Singh Nijjar, led to the expulsion of high-ranking diplomats and stalled trade negotiationsResetting Canada-India Relations: Navigating Security, Trade^[3]. While Canada's new leadership under Prime Minister Mark Carney has signaled a reset, historical grievances—such as the 1985 Air India bombing—continue to strain trustResetting Canada-India Relations: Navigating Security, Trade^[3].

India, meanwhile, is navigating its own geopolitical tightrope. As it deepens ties with Canada, it must also manage its complex relationship with China, a key trade partner and regional rival. China's Belt and Road Initiative (BRI) remains a dominant force in the Global South, creating a competitive landscape where Canada's infrastructure investments must demonstrate distinct value propositions, such as transparency and sustainabilityManaging Canada-China Relations in a Shifting Geopolitical Reality^[1].

Navigating the India-China Dynamic

Canada's engagement with India is further complicated by the U.S.-China trade war and its ripple effects. With U.S. tariffs on Canadian goods and India's own trade tensions with the U.S. over Russian energy imports, both nations are incentivized to diversify their economic partnershipsDeepDive: No more half-measures: A $100 billion plan to transform and diversify Canada's trade infrastructure^[5]. Canada's investments in India's energy and agricultural sectors—such as Alberta's hydrogen exports and Saskatchewan's potash supplies—position it as a reliable alternative to Chinese infrastructure financingIndia-Canada Trade: Opportunities, Challenges, and the Way Forward^[4].

However, Canada's own trade policies with China remain contentious. In response to U.S. and EU actions, Canada imposed 100% tariffs on Chinese electric vehicles and 25% tariffs on steel and aluminum, prompting retaliatory measures on canola and seafood exportsResetting Canada-India Relations: Navigating Security, Trade^[3]. These tensions highlight the fragility of Canada's economic balancing act, where strategic alignment with India must not alienate China entirely.

Domestic and International Challenges

Domestically, Canada's restrictive real estate and immigration policies pose barriers to Indian entrepreneurs and professionals, complicating the ease of doing businessIndia-Canada Trade: Opportunities, Challenges, and the Way Forward^[4]. Internationally, the second Trump administration's protectionist stance and China's retaliatory tariffs underscore the need for multilateral approaches. Canada's collaboration with the U.S., Mexico, and the EU to reinforce the rules-based trading system offers a potential pathway to mitigate these risksResetting Canada-India Relations: Navigating Security, Trade^[3].

Conclusion: Strategic Alignment and Risk Mitigation

Canada's infrastructure and trade equity initiatives in the India-China triangle represent a calculated bet on economic resilience and geopolitical agility. By leveraging its pension funds, federal tools, and strategic partnerships, Canada is positioning itself as a key player in India's development while navigating the risks of China's dominance. However, success will depend on resolving diplomatic tensions, addressing domestic policy barriers, and maintaining a nuanced approach to trade with both nations.

As the global order evolves, Canada's ability to balance these competing interests will determine not only the success of its infrastructure investments but also its role in shaping the future of Indo-Pacific trade and security.