NEW DELHI: In an unexpected move, Canada has paused negotiations for a free trade agreement with India and now both countries will mutually decide on resuming the talks in the future, an official said.

"The Canadian side conveyed that they were taking a pause in India-Canada negotiations on the Early Progress Trade Agreement. This will enable us both to take stock of progress and next steps. We will decide by mutual agreement when negotiations will resume," the official told PTI.

However, the official did not provide more details about the issue.

The development assumes significance as Canadian Prime Minister Justin Trudeau will be here next week to attend the G20 Summit on September 9-10.

Over half a dozen rounds of talks have been held between the countries on the trade pact so far.

In March last year, the two countries re-launched negotiations for an interim agreement, officially dubbed as Early Progress Trade Agreement (EPTA).

In such agreements, two countries significantly reduce or eliminate customs duties on the maximum number of goods traded between them.

They also liberalise norms for promoting trade in services and attract investments.

Indian industry was looking at duty-free access for products like textiles and leather besides easy visa norms for the movement of professionals.

Canada has interests in areas like dairy and agricultural products.

The bilateral trade between the countries has increased to USD 8.16 billion in 2022-23 from USD 7 billion in 2021-22.

Think tank Global Research Initiative (GTRI) co-founder Ajay Srivastava said that halting of India-Canada free trade agreement negotiations does not harm Indian trade interests as more than half of Indian products already enter Canada duty-free and would not have benefitted from this pact.

Indian services sector firms in hospital or education sectors are not globalised enough to establish physical business in Canada, he said.

"Stopping the FTA may harm Canadian exports, which would have benefitted from the crumbling of the high tariff wall in India. The on-again, off-again FTA negotiations began in 2010, stopped in 2017, restarted in 2021, and have halted again. This is likely due to Canada's reluctance to meet India's service-related requests, especially concerning the movement of professionals (Mode IV)," Srivastava said, adding Canada may have found India's goods offer lacking, with significant exclusions.

Global trade dynamics are shifting rapidly, with major players like the US and European Union (EU) imposing stricter regulations on imports, especially in climate and technology.

"It's advisable for countries to focus on building domestic resilience and delay further trade openings until there's a clear and favourable economic justification," he said.