The prime ministers of the two countries announced the start of talks for a comprehensive economic partnership agreement during their meeting on the sidelines of the G20 summit in Seoul Friday.
The two countries aim to push their trade more than three-fold from the current $4.2 billion in the next five years. While main Canadian exports to India include machinery, fertilizers, wood pulp and vegetables, Indian exports comprise garments, metals, precious stones and jewellery, and electrical equipment.
Welcoming the decision, the Toronto Star said, "While it may take many months before the details are worked out, when it does happen Canadians can expect to see more Indian-produced products on store shelves, and perhaps cheaper prices for items already imported from the Asian country.
"The agreement should be a boon for business owners, who could open India-based offices, or simply target consumers in the country. Trade between Canada and India totals about $4 billion - the goal is to boost that to $15 billion.''
A free trade agreement is expected to add about $6 billion each to the economies of the two countries.
But more than anything,Canadian banks and insurance companies will benefit immensely from a free trade pact with one of the fastest growing economies in the world. as they want access to the south Asian market.
After the global meltdown triggered by the US which is Canada's main buyer, Ottawa is trying to lessen dependence on its big neighbour by signing free trade agreements with many other nations.
Economics experts here have described the talks with India as an "important development'' for Canada.
Scotching fears that a free trade agreement will lead to more outsourcing of jobs to India, these analysts say this loss, if any, will be more than offset by Indian companies opening offices in Canada and creating jobs.
"But, with every free trade agreement comes worries that Canadians could lose jobs. We've already seen Canadian companies hiring Indian-based call centres to field customer inquires and that outsourcing could continue and even pick up.
After Canada's ban on India after its 1974 and 1998 nuclear blasts, India-Canada relations have picked up after Ottawa reversed this policy by ending India's nuclear isolation at the Nucelar Suppliers' Group in 2008.
Apart from the nuke deal signed in June, Ottawa has also inked major agreements with India in mining, science and education and other fields.