360° UPSC Mains Analysis

The CEPA will address the recent 8.23% decline in bilateral trade (falling to USD 7.95 billion in 2025-26) by substantially reducing or eliminating customs duties. It will boost India's trade surplus with Canada, which stood at USD 1.39 billion in 2025-26 (exports of USD 4.67 billion vs imports of USD 3.28 billion). The agreement will also secure a stable supply of critical imports like pulses, fertilizers, and coal while expanding market access for Indian services.

The conclusion of the CEPA is expected to boost India's GDP through enhanced trade and investment flows, while helping to diversify import sources of critical inputs like fertilizers and coal. A reduction in customs duties under the agreement could lower import costs, potentially easing WPI inflation for industrial inputs. Furthermore, increased FDI from Canadian pension funds (which stood at USD 4.8 billion between April 2000 and June 2026) will strengthen India's capital account and forex reserves.

The primary sector will benefit from stable imports of pulses and fertilizers, supporting agricultural supply chains. The secondary sector, particularly pharmaceuticals, iron and steel, cotton garments, and electronic goods, will gain from tariff concessions, boosting manufacturing under the 'Make in India' initiative. The tertiary sector will see significant growth in services exports, particularly in telecommunications, computer, and information services, facilitated by easier movement of skilled professionals.

The agreement will enhance employment opportunities in export-oriented sectors like textiles, pharmaceuticals, and IT services, which employ millions of skilled and semi-skilled workers. Facilitating the movement of professionals will benefit the 4,27,000+ Indian students and the 2.9 million-strong Indian diaspora in Canada by easing visa and work permit regulations. Additionally, stable imports of Canadian pulses will help stabilize domestic consumer prices of essential food items.