India and Canada need a practical CEPA: an agreement that prioritises timely progress over exhaustive completeness, sequencing ambition in a way that delivers real economic gains while managing political sensitivities
India and Canada have spent nearly fifteen years trying to translate economic complementarity into a formal trade arrangement. Efforts have repeatedly fallen short, even though the underlying case for closer economic engagement has remained strong. India offers market scale, sustained growth, a large services base, and long-term demand. Canada brings patient capital, technology, natural resources, and some of the world’s most consequential long-horizon institutional investors. The principal reason for the underperformance of the bilateral economic relationship has not been the absence of commercial logic. It has been the absence of a negotiating approach capable of managing political sensitivity without letting it derail the wider enterprise.
Against this backdrop, the effort to conclude the Comprehensive Economic Partnership Agreement (CEPA) by the end of this year deserves close attention. If this round is to succeed where earlier efforts did not, both governments will need to move beyond an all-or-nothing approach that has already consumed too much time. The target is to take bilateral trade to US$50 billion by 2030. India and Canada do not need a perfect CEPA in which every difficult issue is resolved simultaneously and on ideal terms. They need a practical, intelligently sequenced and phased agreement: commercially useful, politically defensible, and institutionally sustainable.
The record of the past is instructive. The earlier CEPA process began in 2010, with promise, but gradually lost momentum. The subsequent attempt to revive the economic track through an Early Progress Trade Agreement (EPTA) was intended to focus first on more manageable areas and create forward movement through a narrower framework. That too stalled as bilateral political tensions overtook the trade track. The result was that economic negotiation, which should have been driven by long-term strategic and commercial logic, became vulnerable to wider political disruption.
India and Canada do not need a perfect CEPA in which every difficult issue is resolved simultaneously and on ideal terms. They need a practical, intelligently sequenced and phased agreement: commercially useful, politically defensible, and institutionally sustainable.
The two countries did not lack common ground. On the contrary, they have sufficient overlap in trade, services, energy, technology, education, and capital flows to justify a serious economic compact. The real problem has been one of method. Negotiations have too often proceeded as though completeness must precede closure. In practice, complex trade agreements are often concluded the other way around. Governments finalise what is feasible, defer what remains politically difficult, and use implementation schedules, safeguards, and review clauses to bridge the gap between present constraints and future ambition. Trade agreements are not concluded when everything is resolved; they are concluded when enough is agreed to move.
A year-end CEPA is therefore still achievable, but only if both sides accept that a phased and intelligently sequenced agreement is not a diluted outcome. Under the present circumstances, it is the only realistic one. The broad architecture of the agreement should be settled this year. Chapters where convergence already exists should be closed without unnecessary delay. The most politically sensitive tariff and regulatory obligations should be placed on staggered implementation schedules, accompanied by carefully framed safeguards and time-bound review mechanisms.
This is not an argument for lowering ambition. The objective should be to make ambition executable. Trade agreements endure not because they eliminate every difficulty at the outset, but because they create a credible pathway for implementation. India and Canada both have sectors that they cannot treat casually. Agriculture remains sensitive. Mode 4 mobility remains politically contested. Some tariff lines continue to pose difficulty. Regulatory predictability is uneven. Investment is important but legally complex. None of this is exceptional. Every major trade negotiation includes sectors that governments defend more carefully than others. The mistake lies in treating those sensitivities as a reason for paralysis rather than as a reason for institutional design.
A sensible CEPA should begin with the chapters capable of generating immediate confidence. Customs cooperation, trade facilitation, standards transparency, procedural simplification, and broad areas of goods and services trade where sensitivities are manageable should not be held back by a smaller cluster of disputed issues. These may not be the most politically visible chapters, but they are often the ones that matter most to business. They reduce friction, lower uncertainty, and create confidence that the agreement is intended to function in practice rather than remain an exercise in diplomatic signalling.
The more difficult tariff lines should be addressed through calibrated transition periods. If some products require five years, seven years, or longer before meaningful liberalisation becomes politically feasible, that should be reflected openly in the agreement. If a limited basket of items remains too difficult in the first phase, it can be placed in a review mechanism rather than allowed to become a permanent obstacle.
Mobility deserves similar treatment. No serious economic partnership can function effectively if legitimate business travel remains cumbersome and uncertain. Services trade depends on the movement of people. So do investment, research collaboration, commercial troubleshooting, and technology partnerships. This need not be drawn into wider immigration debates. A trusted business travel mechanism for pre-cleared investors, professionals, and frequent commercial travellers could reduce transaction costs without weakening regulatory scrutiny.
Regulatory predictability and the reduction of non-tariff barriers are equally important. In many sectors, businesses are not deterred by standards as such; they are deterred by opacity in implementation, abrupt procedural shifts, and uncertainty regarding certification and compliance. A good CEPA should therefore create structured consultation channels on standards, non-tariff barriers, and regulatory procedures. Predictability is often the bridge between commercial interest and actual investment. Market access on paper has limited value if businesses cannot plan with confidence.
The more delicate issue, however, concerns investment. Here, India and Canada need a more precise formulation than they have so far adopted. Investment clearly belongs in the framework. The harder question is how to structure it. Should it sit inside CEPA as a full protection chapter, or should protection be negotiated separately through a bilateral investment agreement? The two sides approach this issue from different institutional and legal traditions, and that divergence should be recognised rather than obscured.
There are reasonable arguments for including investment inside CEPA. Trade, services, mobility, and investment increasingly move together. A single framework creates political coherence and signals that the agreement extends beyond tariff liberalisation. At the same time, there is an equally strong argument for negotiating a separate bilateral investment agreement. Investment protection is often the most legally intricate and politically sensitive component of any economic negotiation.
This concern is especially relevant in the India-Canada case because Canada’s economic stake in India is not limited to conventional foreign direct investment. A substantial share comes through Canadian pension funds investing via portfolio routes, listed assets, infrastructure vehicles, and other long-term financial platforms. This is precisely why the investment issue requires differentiated treatment rather than a standard template.
New Delhi and Ottawa should aim to conclude a phased CEPA by the end of this year, lock in the chapters where convergence already exists, stage implementation in the most sensitive sectors, and add a practical mobility arrangement for genuine commercial actors.
CEPA could therefore incorporate meaningful provisions on investment promotion, transparency, facilitation, investor services, and institutional dialogue. A parallel bilateral investment agreement could then address definitions, scope, portfolio coverage, dispute-settlement design, exceptions, and the balance between investor confidence and the host state’s right to regulate. Such a division of labour would allow the broader trade agreement to move forward without underestimating the legal and political complexity of investment protection.
Such an approach is especially well-suited to the India-Canada relationship because Canadian pension funds are patient investors. They are not speculative actors seeking rapid gains, but long-horizon institutions looking for predictability, clarity, and credible process. A carefully drafted bilateral investment agreement could provide that assurance without opening the door to expansive claims against legitimate public policy. It would also allow both sides to negotiate the treatment of portfolio investment in a more tailored and technically grounded way, rather than permitting that single issue to hold up a wider CEPA that is otherwise within reach.
The implication is hard to miss. New Delhi and Ottawa should aim to conclude a phased CEPA by the end of this year, lock in the chapters where convergence already exists, stage implementation in the most sensitive sectors, and add a practical mobility arrangement for genuine commercial actors. On investment, they should adopt a more differentiated approach: include facilitation inside CEPA, but negotiate protection separately through a bilateral investment agreement calibrated to the realities of pension-fund and portfolio capital.
That would be a more meaningful outcome than another round of optimism. India and Canada have already tried delay, drift, and the hope that difficult issues would become easier if left unresolved. That approach has failed, and there is little reason to believe it will suddenly succeed. The more credible path now is a practical agreement, carefully sequenced and honestly structured. The choice is no longer between an ideal CEPA and a compromised one. It is between a workable CEPA that can be concluded now and another lost year in a relationship that has already lost too many.
Amb. Sanjay Kumar Verma is the former Chairman of RIS, the former High Commissioner of India to Canada, and the former Ambassador of India to Japan and Sudan.
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Sanjay Kumar Verma is the Chairperson of the Research and Information System for Developing Countries and has previously served as India’s High Commissioner to Canada ...
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