Canada and India have announced plans to expand and deepen energy trade between the two countries. This initiative follows meetings between Canadian and Indian energy ministers and forms part of broader efforts to diversify energy supply relationships and strengthen economic ties. Both countries see potential in creating a sustainable and strategic energy partnership that benefits their long-term trade and energy goals.
For Canada, this push is about export diversification. Currently, nearly 97% of Canada’s energy exports go to the United States, creating heavy reliance on a single market. Canadian Prime Minister Mark Carney has set a goal to double non-U.S. energy exports, identifying markets like India as strategically important. Canada plans to export key energy products such as liquefied natural gas (LNG), crude oil, and liquefied petroleum gas (LPG) to India and other Asian markets.
India, on the other hand, is a major global energy consumer, ranking as the third-largest consumer of oil, fourth-largest importer of LNG, and third-largest consumer of LPG. India imports nearly 88% of its crude oil and about half of its natural gas, making it eager to diversify its supply sources. Expanding energy trade with Canada helps India secure new sources of energy to meet the rapidly growing demand expected over the next two decades.
The current trade figures show significant potential for growth. In 2024, Canada exported $761.5 million worth of energy products to India, including $602 million in coal and $158 million in crude oil and bitumen. India exported $206 million of refined petroleum products to Canada during the same year. Compared to Canada’s $171 billion in energy exports to the U.S., trade with India is still very small, highlighting the opportunity to expand this market significantly.
The strategic motivation behind this initiative is clear. Canada wants to reduce its reliance on one dominant market while India seeks to broaden its energy supply sources to support its growing economy. The partnership is expected to deliver commercial benefits for Canadian energy producers while helping India meet its expanding energy needs.
The deal also comes after a period of diplomatic tensions. In 2023, disputes over a high-profile murder case involving a Canadian citizen led to the expulsion of diplomats and a pause in comprehensive trade talks. However, with renewed engagement, reappointment of high commissioners, and a pragmatic focus on energy and economic collaboration, both countries are now working to strengthen trade while managing diplomatic sensitivities.
Overall, the Canada–India energy trade initiative signals a forward-looking approach to economic partnership. For Canada, it represents a strategic move to diversify energy exports and reduce dependence on the U.S., while for India, it provides access to new energy sources to fuel its growth. The agreement lays the groundwork for long-term economic cooperation, trade diversification, and energy security, with massive growth potential in the coming years.