Modi’s foreign policy in 2026: trade deals, Canada and global ties

Trade has been at the heart of Indian diplomacy in 2026. Under Prime Minister Narendra Modi, India has brought several free trade agreements into force and moved closer to deals with the European Union and Canada. This article sets out the main developments, based on official announcements.

The United Kingdom

The India–UK Comprehensive Economic and Trade Agreement (CETA) was signed in London on 24 July 2025, during Modi’s visit to the UK, and came into force on 15 July 2026. It cuts or removes tariffs on a large share of goods traded between the two countries — including textiles, leather, gems and jewellery from India and items such as whisky, cars and medical devices from Britain — and includes provisions on services and professional mobility.

The UK government has described it as the biggest bilateral trade deal it has made since leaving the European Union, and it is one of the most comprehensive India has concluded.

The European Union

India and the European Union announced on 27 January 2026 that negotiations on a free trade agreement had been concluded — talks that first began in 2007 and were relaunched in 2022. The formal signing is expected in December 2026. Once ratified, it will link India with a bloc of 27 countries and is likely to be India’s largest trade agreement by economic size.

Oman and New Zealand

• Oman: the India–Oman Comprehensive Economic Partnership Agreement came into force on 1 June 2026, strengthening India’s ties in the Gulf, where millions of Indians live and work.
• New Zealand: the India–New Zealand free trade agreement came into force on 20 October 2026, covering trade in goods, services and investment.

These follow earlier agreements with the United Arab Emirates and Australia (both 2022) and with the four EFTA countries — Switzerland, Norway, Iceland and Liechtenstein — which took effect in October 2025.

Canada: a reset

Relations between India and Canada were badly strained in 2023 and 2024, with both countries expelling diplomats. After Mark Carney became Canada’s prime minister in 2025, the two governments began restoring ties; Modi attended the G7 summit hosted by Canada in June 2025, and high commissioners were reappointed.

On 13 October 2026 Modi and Carney spoke by phone and discussed concluding a Comprehensive Economic Partnership Agreement (CEPA). A visit by Modi to Canada has been planned for December 2026.

The United States

Trade negotiations with the United States have continued since 2025 amid disagreements over tariffs. At the time of writing, no final bilateral trade agreement had been announced.

Wider diplomacy

India continues to follow what External Affairs Minister S. Jaishankar often calls “strategic autonomy” — building partnerships with many countries without joining formal alliances. That includes:

• membership of the Quad with the United States, Japan and Australia;
• membership of BRICS and the Shanghai Cooperation Organisation;
• a focus on the “Global South”, which India championed during its G20 presidency in 2023, when the African Union joined the G20.

Why trade deals matter

Supporters argue that the agreements will open markets for Indian exporters, attract investment and create jobs in labour-intensive sectors such as textiles and footwear. Some farm groups and industry bodies have raised concerns about competition in sensitive sectors, and India has generally protected areas such as dairy and some agricultural products in its deals.

What to watch

• The signing of the India–EU agreement in December 2026 and its ratification.
• Progress on the Canada CEPA and Modi’s planned visit.
• Any agreement with the United States.

Together, these will shape how India trades with the world for years to come.