The resumption of negotiations on the free trade agreement and efforts towards normalisation of ties between India and Canada provides New Delhi an opportunity to tap another source of critical minerals as it seeks to diversify its supply base.
The recent curbs by China on supplies of some key minerals like Rare Earth Magnets has added urgency to the task. As Prime Minister Narendra Modi met Canada’s Prime Minister Mark Carney to reset the ties after more than 20 months of estrangement, the discussions were also held on opportunities for future collaboration in critical minerals.
“A trade pact could pave the way for structured cooperation in mineral exploration, joint ventures, and technology sharing, helping India build a more resilient and secure supply chain. This could be the beginning of enhanced energy cooperation, access to advanced technologies, and defense partnership between the two nations,” economist at Deloitte India Rumki Majumdar said.
Canada has significant deposits of critical minerals. It is also a significant exporter of these minerals in the world with exports exceeding $ 50 billion in 2023. The US remains its biggest market taking in almost 80% of the production.
The recent US tariff measures – including those on critical minerals – have prompted Canada to seek new trade opportunities.
Unlike China that seeks to use its dominance in the sector for meeting geopolitical objectives, Canada’s Critical Minerals Strategy talks of a scenario where critical minerals are not used solely for domestic manufacturing but also for capturing value by increasing exports for allies.
“As India scales up its EV, solar, and electronics sectors, access to lithium, cobalt, nickel, and rare earth elements becomes mission-critical. Canada, with reserves of 31+ critical minerals and a reputation as a reliable, ESG-compliant supplier, offers India a non-China dependent source. A revived India-Canada FTA can provide stable, preferential access to these resources, encourage joint ventures in mining and processing, and enable technology transfers,” Executive Director- Indirect Tax, Nangia Andersen Sivakumar Ramjee said.
“To play this game right, India must negotiate assured long-term offtake agreements, seek investment rights in Canadian upstream projects, and push for dedicated bilateral frameworks on critical mineral value chains. Strategic FTAs like this can form the backbone of India’s green industrial future and support its ambition of self-reliance in high-tech manufacturing,” he added.
For India, China is the largest supplier of essential minerals such as lithium, nickel, cobalt, graphite, and rare earth elements, which are critical for EVs and clean energy technologies. In comparison, Canada remains a minor supplier of these minerals to India.
In key industrial input like lithium, the imports from China are 71% of the total while Canada’s share is 0.13%. In rare earth elements China’s share in India’s imports is 42% as compared to 0.02% for Canada, according to an analysis by Tanya Dawar of the think tank Asia-Pacific Foundation of Canada.
As Canada seeks new markets, India is also seeking to diversify its supplier base and for that agreements have been signed with countries like Australia. Argentina, Brazil and Chile are the other sources that are being explored.