Can Canada become India’s alternative energy partner amid West Asia tensions?

India, the world’s third-largest oil importer and energy consumer, faces mounting concerns over energy security amid fears of prolonged instability in the Middle East.

Prime Minister Narendra Modi recently urged citizens to adopt austerity measures, cautioning that the escalating conflict in West Asia could have a severe impact on India’s economy through rising crude oil prices and pressure on foreign exchange reserves.

Modi framed this as a patriotic duty: India’s fuel austerity should be treated as a “national duty” in the crisis.

Speaking at a public event earlier this month, Modi said India must remain prepared for “economic uncertainty” stemming from global geopolitical developments, particularly disruptions in energy supply chains.

The warning comes as India imports more than 85% of its crude oil requirements, with a significant share sourced from the Gulf region. Any sustained disruption in West Asian shipping routes or production could sharply increase India’s import bill and inflationary pressures.

The recent Gulf crisis has dramatically disrupted supply. Crude oil has traded above US$100 per barrel since February 2026, exerting acute pressure on India’s import bill and foreign exchange reserves.

Canada ​pushes export diversification

Against this backdrop, Canada could emerge as a strategic energy partner for India as Ottawa seeks to reduce its economic dependence on the United States, its largest trading partner.

Canada, one of the world’s top oil and natural gas producers, has increasingly looked toward Indo-Pacific markets to diversify exports amid concerns over overreliance on the US market.

According to the Government of Canada, nearly 75% of Canadian exports currently go to the United States, prompting policymakers to push for broader trade engagement with Asian economies.

“India needs diversification in energy sourcing, while Canada needs diversification in export destinations. Strategically, the two countries complement each other,” said Vina Nadjibulla, vice president of research and strategy at the Asia Pacific Foundation of Canada.

Canada possesses the world’s third-largest proven oil reserves and is also among the largest uranium producers globally. Industry observers say Canadian LNG exports from the Pacific coast could eventually provide India with an alternative source of cleaner transition fuel, though infrastructure and shipping logistics remain challenges.

​Canada-India ​energy ​partnership

In March 2026, Canadian Prime Minister Mark Carney toured India, his first bilateral visit there since 2018. In joint statements, he and PM Modi stressed expanding trade and investment.

Carney noted India’s 1.4 billion population makes it “the world’s fastest-growing major economy", with energy demand rising “faster than anywhere else in the world”. He highlighted Canada as an “energy and agricultural superpower” with a priority on export diversification.

Narendra Modi met with Mark Carney in New Delhi during Carney’s recent visit to India. Photo: PIB

Carney and Modi agreed to a new India–Canada Strategic Energy Partnership. They relaunched a ministerial energy dialogue at the India Energy Week conference (January 2026) and set a joint work plan to integrate markets.

In the joint leaders’ statement, both sides underlined their complementary energy roles and the need for supply security. Canada is “poised to become a major global supplier of LNG”, and Modi confirmed India intends to source LNG from Canada.

For India, closer energy cooperation with Canada could provide greater resilience against geopolitical disruptions.For Canada, India represents one of the world’s fastest-growing energy markets at a time when Ottawa is seeking alternatives to the US-centric export model.