Canada-India Diplomatic Reset: Unlocking Cross-Border Investment in Infrastructure and Clean Energy

The Canada-India bilateral relationship in 2025 is undergoing a transformative phase, driven by a strategic pivot toward economic pragmatism and shared global ambitions. After years of diplomatic friction, including the fallout from the 2023 Hardeep Singh Nijjar case, both nations have prioritized resetting ties to unlock cross-border investment opportunities in infrastructure and clean energy. This shift is not merely a diplomatic gesture but a calculated move to position Canada and India as key players in the Indo-Pacific’s evolving economic landscape.

A Framework for Stability: EPTA and FIPA

At the core of this renewed partnership is the Early Progress Trade Agreement (EPTA), a stepping stone toward a broader Comprehensive Economic Partnership Agreement (CEPA). The EPTA aims to reduce trade barriers and accelerate market access, particularly in sectors like agriculture, energy, and infrastructure [1]. Complementing this is the Foreign Investment Promotion and Protection Agreement (FIPA), a legally binding framework designed to protect Canadian investments in India’s market. By providing predictability and dispute-resolution mechanisms, FIPA addresses long-standing concerns about regulatory uncertainty, making India a more attractive destination for Canadian capital [2].

The significance of these agreements is underscored by the scale of existing investments. For instance, Canada’s Brookfield Corporation acquired American Tower’s Indian operations for $2.1 billion in 2024, while the Canada Pension Plan Investment Board (CPPIB) has committed $838 million to renewable energy projects in India [2]. These moves signal confidence in India’s infrastructure and energy markets, which are projected to grow as the country seeks to meet its net-zero targets and modernize its grid.

Clean Energy: A Shared Vision

India’s clean energy sector has emerged as a focal point for Canadian investment, driven by aggressive capacity auctions and improved payment security for renewable projects. In 2024 alone, India attracted $2.4 billion in clean energy project interventions, with foreign direct investment (FDI) surging from $1.6 billion in 2022 to over $4 billion in 2025 [5]. Canadian firms are capitalizing on this momentum through joint ventures and technology transfers. For example, the 2025 Canada-India collaborative R&D initiative offers funding for SMEs to co-develop clean technologies, with Canadian participants eligible for up to 50% reimbursement of project costs [2].

Infrastructure as a Strategic Lever

Infrastructure development is another area where Canada and India are aligning priorities. Canada’s expertise in engineering and project financing complements India’s need for $1.5 trillion in infrastructure investments by 2030 to support urbanization and industrial growth [3]. The EPTA’s emphasis on reducing trade barriers for construction materials and equipment will lower costs for Canadian firms bidding on Indian infrastructure projects. Additionally, the FIPA’s investor protections mitigate risks associated with regulatory shifts, encouraging long-term commitments.

Challenges and the Path Forward

While the diplomatic reset has created a favorable environment, challenges persist. Unresolved security concerns, particularly around transnational crime and law enforcement cooperation, remain a sticking point [4]. However, both nations have demonstrated a willingness to compartmentalize these issues in favor of economic collaboration. For investors, the key takeaway is that Canada-India ties are now anchored in tangible agreements and mutual economic interests, reducing the volatility that once characterized the relationship.

For Canadian investors, the window of opportunity is clear: India’s infrastructure and clean energy sectors offer high-growth potential, supported by policy frameworks and bilateral agreements that mitigate risk. As the Indo-Pacific becomes a global economic battleground, Canada’s strategic alignment with India is not just a diplomatic win—it’s a calculated investment in the future.

Source:
[1] India-Canada Bilateral and Trade Relations in 2025, [https://www.india-briefing.com/news/india-canada-bilateral-and-trade-relations-in-2025-36594.html]
[2] The Canada-India Thaw: A New Dawn for Critical Minerals, [https://www.ainvest.com/news/canada-india-thaw-dawn-critical-minerals-clean-energy-indo-pacific-supply-chain-2506/]
[3] Canada-India relations, [https://www.international.gc.ca/country-pays/india-inde/relations.aspx?lang=eng]
[4] Canada and India Are Getting Along Again. The Peace Won’t Last, [https://thewalrus.ca/canada-india-peace-is-temporary/]
[5] Foreign investments are helping drive India's clean energy boom, [https://india.mongabay.com/2025/07/foreign-investments-are-helping-drive-indias-clean-energy-boom/]