The India–Canada Reset: Trade, Trust and the Price of Normalcy.....by KBS Sidhu

Why a quieter bargain—built around Punjab’s security and migration realities—will decide whether Comprehensive Economic Partnership Agreement (CEPA), energy and talent flows can truly restart.

The Canadian Prime Minister, Mark Carney is landing in Mumbai today, 26 February, and both sides are treating his India trip as the formal opening of a reset package.

Ottawa wants economic diversification, energy and tech deals, and a managed off-ramp from the Nijjar freeze. New Delhi wants hard movement on Khalistan-linked security concerns and predictable channels on students and talent—without slipping back into the Trudeau-era theatre of public accusation, performative optics, and megaphone diplomacy.

The reason this visit matters is not that it will produce a handful of memoranda. It matters because it is attempting to restore a basic rule of international life that the Nijjar episode suspended: serious business is done quietly, through institutions, with consequences attached—and not through political signalling that travels faster than evidence.

What is on the menu now

From Canada’s side, expectations are explicit, and the geography tells its own story. Carney’s emphasis is on Mumbai and New Delhi—commerce, investment, and strategic conversation—rather than symbolic pilgrimages or headline-baiting diaspora moments.

Canada is pushing “ambitious new partnerships” across trade, energy, technology and AI, talent and culture, and defence, with a clear intent to meet business leaders and unlock investment in both directions.

This sits inside a larger Canadian pitch: India as a pillar of an Indo-Pacific trade pivot. In plain terms, Ottawa wants to reduce over-reliance on the U.S. market by building deeper supply-chain and investment ties with India, alongside other key partners in the region. It is a diversification story, but it is also an insurance policy against a world in which tariffs, industrial policy and geopolitics increasingly dictate market access.

If that is the frame, the expected deliverables flow naturally: reviving and pushing CEPA talks; closing significant uranium, energy and critical-minerals arrangements; and signing sectoral understandings on nuclear, oil and gas, AI, quantum, education and culture. Canada is saying—implicitly but clearly—that it wants India as a growth partner and a strategic hedge.

India’s menu is of a different kind. New Delhi’s priorities, as reflected in official responses and security briefings, centre on visible Canadian movement against Khalistan-linked extremist networks, credible law-enforcement and intelligence cooperation, and a consular and visa environment stable enough for trade and student flows to recover. Energy, critical minerals and tech collaboration are welcome—but in India’s mind they cannot be insulated from the trust deficit. Trade is part of a package, not a silo. The message is simple: do not ask for market access and investment while tolerating a security ecosystem that targets India’s territorial integrity and public order.

Quiet pre-work: the security leg is being built first

This visit does not come in a vacuum. There has been spadework, and it is deliberately institutional. The Doval–Drouin channel—between India’s National Security Adviser and Canada’s top national security adviser—signals that both capitals are trying to move from rhetoric to machinery: real-time intelligence sharing, monitoring of financing, and disruption of modules, including the criminal networks—drugs, weapons, intimidation—that sustain militancy.

The most consequential shift is Canada’s own language. When a security service publicly acknowledges that Khalistani extremists have used Canadian soil to promote, fundraise and plan violent activities targeting India—and traces the trend back decades—it changes the diplomatic geometry. It does not mean Canada is adopting India’s political vocabulary in full.

It does mean Ottawa is conceding there is a problem that cannot be explained away as mere “speech” or “community politics”. That concession, if followed by operational cooperation, is what New Delhi will want on the table when CEPA, uranium and AI are discussed.

This is what a reset looks like when it is serious: not a sentimental reunion, but a negotiated bargain in which each side tests whether the other can deliver on hard commitments.

MPs, Punjab visits, and the politics of calibration

Behind the official visit lies an undercurrent that has complicated India–Canada ties for years: the role of Sikh and Punjabi-origin ministers and MPs in Canadian domestic politics, and the way visits to Punjab and gurdwaras are read in India.

For over a decade, such visits—sometimes entirely normal, sometimes politically charged—have triggered commentary in India about proximity to organisations and narratives that slide from identity affirmation into separatist romanticism, and from advocacy into glorification of violence.

More recently, Indian reporting about a “secret visit” by Canadian MPs to Punjab has raised precisely the kind of questions New Delhi wants Ottawa to pre-empt: who funded the trip, which Punjabi political actors were met, and whether diaspora networks with a Khalistan agenda were involved.

Whether every such report is perfectly framed is beside the point. The point is that, in the current climate, opacity becomes a liability and optics become combustible.

And yet, the tone is changing. Canada’s messaging has edged away from denial towards a more nuanced line: defend free speech and peaceful advocacy, but acknowledge that a subset of diaspora activity crosses into violent extremism.

That shift allows for a more disciplined approach: curated visits, clearer distancing from organisations that openly glorify violence, and a more transparent interface between community outreach and national security policy.

In a genuine reset, MP-level contacts can no longer be free-floating. They get folded into the larger diplomatic package Carney is bringing—where outreach to Punjab is judged not by sentiment, but by whether it helps or undermines the new security understanding.

The Trudeau overhang: why normal diplomacy broke down

None of this can be understood without the Trudeau overhang. Trudeau’s September 2023 statement in the House of Commons—citing “credible allegations” of a potential link between agents of the Government of India and the assassination of Hardeep Singh Nijjar in Surrey, British Columbia, on 18 June 2023—pushed a fragile relationship into open confrontation.

Nijjar, a naturalised Canadian citizen and self-styled Khalistan ideologue, had been designated a “terrorist” by the Government of India under its domestic laws; Ottawa treated the killing as a grave breach of sovereignty, while New Delhi saw the charge as the culmination of years of Canadian indulgence towards extremist ecosystems operating under the cover of diaspora politics.

India’s response was predictable and, from New Delhi’s standpoint, unavoidable: reject the charge as absurd and politically motivated; point to what India describes as longstanding Canadian tolerance of Khalistan-linked extremism; and insist that any cooperation must be routed through legal channels with specific evidence, not public insinuation.

The fallout followed the logic of the insult: tit-for-tat expulsions, staffing parity demands, a freeze in trade talks, a period of visa disruption, and a thickening atmosphere of fear and uncertainty for Indian communities in Canada—especially students. Carney’s visit, therefore, is not taking place in normal times. It is a prime-ministerial attempt to climb out of a hole dug when domestic politics, diaspora pressures and geopolitical signalling overwhelmed the careful habits of statecraft.

Where Punjab fits into the package

Punjab sits at the intersection of three realities that India and Canada can no longer treat separately: security, migration, and political symbolism.

On security, Punjab remains the reference point for Indian demands. India argues that Canada-based Khalistani extremists have used gurdwaras and community networks in parts of Canada to fundraise, amplify propaganda, glorify past militants, and intimidate moderate voices—activities New Delhi links to attempts to revive militancy in Punjab through financing, drugs, arms and online radicalisation. Whether or not every allegation is equally substantiated, India’s strategic position is consistent: diaspora extremism is not an abstract debate about speech; it is a transnational ecosystem with real consequences on the ground.

On migration, Punjab also bears a disproportionate share of the cost when relations freeze. Punjabis account for a large share of Indian students in Canada and are heavily represented in the permanent residency and citizenship pipeline.

When visas tighten and permits drop, it is Punjab’s youth—and Punjab’s household economies—that absorb the shock. The diplomatic crisis, therefore, is not just a file in a foreign ministry; it is a lived disruption for families whose aspirations are tied to Canadian education and mobility.

Carney’s most politically intelligent decision may be to avoid making Punjab his symbolic centrepiece. By staying with Mumbai and Delhi, and by emphasising trade, energy, AI and critical minerals rather than gurdwara optics, he reduces the risk of a Khalistan-adjacent controversy hijacking the visit. For New Delhi, that is a feature, not a bug. It leaves space for carefully managed official or parliamentary visits to Punjab later—once the security cooperation architecture is bedded down and the relationship is no longer walking on a wire.

The larger strategy: a four-legged reset

Seen together, this is a four-legged package.

First, a security leg: Canada’s acknowledgement of the Khalistan problem, institutional cooperation through the Doval–Drouin channel, and a shared commitment—at least on paper—to disrupt violent and criminal networks with links to Punjab.

Second, an economic leg: revival of CEPA, energy and uranium engagement, critical minerals supply, green transition financing, and AI and quantum collaboration.

Third, a people-to-people leg: managed normalisation of student, work and migration pathways, with both sides trying—belatedly but sensibly—to insulate ordinary students from the swings of high politics.

Fourth, a narrative leg—and this is where Carney’s Davos speech matters. At Davos in January 2026, he argued that the old comfort of the “rules-based order” has given way to a harsher world of unconstrained great-power bargaining, where market access, finance and supply chains can be weaponised. His prescription was not romantic multilateralism, but what might be called values-based realism: build strength at home, form flexible coalitions with other middle powers, and reduce dependence on any single hegemon. The line that will travel—because it captures the new mood in a single sentence—was blunt: “If we’re not at the table, we’re on the menu.” Read into the India trip, this becomes more than rhetoric. It supplies the political story Ottawa wants to tell its own electorate and business community: deeper ties with India are not a favour to Delhi or a diaspora gesture; they are part of Canada’s strategic autonomy in a coercive world.

Once you see it this way, “what is on the menu” becomes more than a list of MoUs. It is an attempt to rewrite the script: away from Trudeau-era diaspora theatrics and accusatory megaphone diplomacy, towards a hard-nosed bargain. Canada recognises and helps tackle the Khalistan-linked extremism problem; India re-opens the full economic and mobility menu, including for the young in Punjab, under a new rules-of-the-game understanding.

The real test will not be the communiqués. It will be whether both sides can live with the implications of seriousness: Canada acting against violent extremist infrastructure even when it sits inside politically sensitive community spaces; and India restoring predictability for trade and talent flows without demanding public capitulation or theatrical apologies. If that balance is struck, the reset can hold. If it is not, this will be remembered as yet another “new beginning” that could not survive the first hard decision.

February 26, 2026