Mark Carney’s rise from a globally respected central banker to Canada’s Prime Minister signals a dramatic shift in the country’s political landscape. Among his most urgent tasks is repairing Canada’s strained relationship with India, a key economic and geopolitical partner

Mark Carney’s transition from a globally acclaimed central banker to Canada’s Prime Minister marks a profound shift in leadership dynamics. Renowned for his crisis management at the helm of the Bank of Canada and the Bank of England, he now faces the uncharted terrain of political leadership. Taking charge of a deeply divided political landscape, he must navigate a strained Indo-Canadian relationship and the resurgence of protectionism in a Trump-led America.

From Central Banker to Political Leader

While his economic acumen lends him credibility in managing fiscal policy and trade relations, his greatest challenges will be diplomatic-repairing strained ties with India, navigating a hostile White House, and restoring public trust in Canada’s institutions. His leadership style, devoid of political baggage but rooted in financial pragmatism, will determine whether he succeeds in stabilising Canada’s position on the global stage.

Repairing Indo-Canadian Relations

It is well known that former Prime Minister Justin Trudeau alienated much of the Indian community in Canada by openly supporting Khalistani elements, severely straining relations with India. Carney has indicated that he favors stronger ties with India, a move that would benefit both nations. Unlike Trudeau, who pursued a self-serving political agenda at the cost of diplomatic relations, Carney must now leverage his skills and experience to mend fences with New Delhi.

One of Carney’s most urgent foreign policy tasks will be repairing Canada’s damaged relationship with India. Rebuilding trust through direct talks with Indian Prime Minister Narendra Modi and senior officials-while avoiding public accusations that could further aggravate tensions-will be crucial.

Key measures include:

1.Addressing India’s concerns about pro-Khalistan extremism operating from Canadian soil.

2.Strengthening counterterrorism collaboration with India.

3.Reviving discussions on the stalled Canada-India Comprehensive Economic Partnership Agreement (CEPA).

4.Encouraging Canadian investments in India’s technology and infrastructure sectors.

5.Attracting Indian investments into Canada’s energy and AI industries.

6.Easing visa restrictions for Indian students and professionals to reinforce diaspora-driven relations.

Tackling Khalistani Extremism

Managing the presence of Khalistani elements in Canada remains a significant challenge. Trudeau’s perceived leniency toward these extremists led to a diplomatic crisis, especially after the Nijjar controversy. If Carney aims to restore relations with India while maintaining domestic stability, he must strike a balance between national security and democratic freedoms.

Potential steps include:

1. Directing CSIS and the RCMP to closely monitor extremist groups.

2. Increasing surveillance on pro-Khalistan funding networks.

3. Implementing stricter regulations on events that glorify violence against India.

4. Enhancing intelligence-sharing with India’s RAW and IB.

5. Considering the deportation of individuals involved in terrorist financing or inciting violence against India.

6. Establishing a bilateral security task force to monitor extremist activities.

Carney must also distinguish between moderate Sikhs and extremist Khalistanis, ensuring that law enforcement targets violent elements rather than peaceful Sikh advocacy groups. His approach must be security-driven rather than politically motivated-unlike Trudeau’s strategy of appeasement.

Balancing Indo-Canadian Relations and Domestic Politics

Restoring trust with India while managing domestic political sensitivities will require a delicate balancing act. Carney’s lack of political baggage allows him to take a fresh approach, while his global reputation ensures India takes his diplomatic overtures seriously. Leveraging economic incentives to reset relations with India could provide him with a major diplomatic victory early in his tenure. However, he will face opposition from pro-Khalistan groups in Canada, accusations of suppressing free speech and resistance from left-leaning Liberals who supported Trudeau’s stance. If he implements a balanced policy-cracking down on extremists while protecting legitimate Sikh voices-he can repair Indo-Canadian ties without shaking domestic instability.

The Indian Diaspora’s Influence

The Indian community in Canada, comprising approximately 1.86 million individuals according to the 2021 census, represents about 5.1 per cent of the national population. This demographic has significantly influenced Canada’s multicultural landscape, particularly in urban centers such as Toronto, Vancouver, Calgary, Edmonton, and Montreal.

Notable political figures from this community include:

Jagmeet Singh: Leader of the New Democratic Party (NDP) since 2017 and the first person of Indian descent to lead a major federal party.

Harjit Singh Sajjan: MP for Vancouver South and former Minister of National Defense.

Anita Anand: Appointed Minister of National Defense in 2021.

Bardish Chagger: Former Minister of Diversity and Inclusion and Youth.

Chandra Arya: MP for Nepean, Ontario, and advocate for economic development and immigrant integration.

Political Engagement and Diplomatic Tensions

The Indian community’s active political participation underscores its commitment to Canada’s democratic processes. However, relations between Canada and India deteriorated following the October 2024 murder of Sikh separatist Hardeep Singh Nijjar in British Columbia.

Trudeau accused the Indian government of orchestrating violence against dissidents in Canada, leading to reciprocal diplomatic expulsions and further straining bilateral ties. This crisis has raised concerns among the Indian diaspora, particularly regarding immigration, education, and economic exchanges. For Carney, engaging constructively with the Indian community is crucial. Addressing their concerns, fostering inclusive policies and working toward diplomatic reconciliation with India will be essential steps in strengthening Canada’s social and economic fabric.

Domestic Political Challenges

Carney assumes office amid deepening political divides. The Liberal Party has suffered declining public confidence, particularly in Western Canada, where Trudeau’s policies alienated oil-dependent provinces like Alberta and Saskatchewan. Meanwhile, right-wing populism has gained traction, mirroring global trends.

While Carney’s lack of electoral experience may be a vulnerability, his credibility as an economic strategist could help him regain voter trust.

Managing inflation, stabilising interest rates, and addressing affordability concerns will be immediate priorities. Gaining support from both progressive and conservative voters will be crucial for effective governance, while restoring confidence within his party and among centrist voters will determine his political longevity.

Conclusion

Carney’s leadership will be defined by his ability to steer Canada through complex domestic and global challenges.

A strategic recalibration of ties with India could elevate his stature, but any misstep-particularly on the Khalistan issue-risks deepening tensions and undermining economic prospects in South Asia. India will also have to understand the priortise and compulsions of the new Canadian prime minister to reboot the relations.

(The writer is a strategic affairs columnist and senior political analyst.  Views expressed are personal)