Doing Business in Canada

Published 25 August 2026

In short

Indian businesses in Canada must incorporate federally or provincially, register with the CRA for a Business Number, obtain provincial sales tax registration, register extra-provincially in each operating province, set up payroll and workers compensation, and comply with bilingual labelling rules. Ontario and British Columbia have no director residency requirements.

Key facts

Capital: Ottawa
Currency: Canadian Dollar (CAD)
Trade with India: CAD 13.55 billion in goods in 2025, with India's exports at CAD 9.68 billion and imports at CAD 3.87 billion, plus CAD 19.62 billion in services trade in 2025 with India's services exports at CAD 4.45 billion and imports at CAD 15.17 billion (MEA brief on India-Canada bilateral relations, April 2026).
Indian community: More than 1.8 million Indo-Canadians and an estimated 1 million non-resident Indians, making Canada host to one of the largest Indian diasporas abroad, per the MEA brief on India-Canada bilateral relations, April 2026.

The market

Canada is a wealthy market of about 41 million people spread across a very large territory, with economic weight concentrated in Ontario, Quebec, British Columbia and Alberta. Two way goods trade with India was CAD 13.55 billion in 2025, with India’s exports at CAD 9.68 billion and imports at CAD 3.87 billion, per the MEA brief on India-Canada bilateral relations of April 2026. Services trade was larger still at CAD 19.62 billion in 2025, with India’s services exports at CAD 4.45 billion and imports at CAD 15.17 billion. Portfolio investment from Canada into India is estimated at more than CAD 100 billion, and more than 600 Canadian companies have a presence in India with over 1,000 actively pursuing the market.

Why Indian businesses go there

Three reasons. First, the diaspora is enormous and commercially active, which shortens the distance to first customers in food, retail, media, financial services and IT staffing. Second, Canada is a stable, English and French speaking common law jurisdiction with federal incorporation available online, and it gives access to the North American market. Third, both governments are actively rebuilding the relationship. A Comprehensive Economic Partnership Agreement is under negotiation with a stated objective of doubling bilateral trade to USD 50 billion by 2030, and the political relationship was reset through the Prime Ministerial visits of 2025 and 2026.

The diaspora and business community

Canada hosts more than 1.8 million Indo-Canadians and an estimated 1 million non-resident Indians, one of the largest Indian diasporas in the world, per the MEA brief of April 2026. Concentrations are in the Greater Toronto Area, Vancouver and Surrey, Calgary, Edmonton and Winnipeg. Unlike some diasporas, this one is deeply embedded in Canadian business, politics and the professions, and Punjabi and Gujarati business networks are genuine channels for distribution, financing and property. For most Indian consumer goods and services businesses, the diaspora is the realistic beachhead market.

Sector strengths

India exports pharmaceutical products, machinery parts and mechanical appliances, iron and steel articles, electronic goods, organic chemicals, jewellery, gems and precious stones, clothing and textile articles, seafood, engineering goods and auto parts. India imports pulses, fertilisers particularly potash, mineral fuels, wood pulp, gems and precious stones including diamonds, aircraft parts, machinery parts, paper and paperboard and iron and aluminium scrap. IT services, education and space cooperation are growing areas.

The honest difficulties

Director residency is the first structural problem. Federal incorporation requires at least 25 percent of directors to be resident Canadians, and several provinces impose similar rules, though Ontario and British Columbia do not. That drives most foreign owned businesses to incorporate in Ontario or British Columbia rather than federally. Second, Canada is not one market. Sales tax differs by province between GST alone and harmonised or separate provincial sales taxes, employment standards and workers compensation are provincial, and you must register extra-provincially wherever you operate. Third, immigration has become significantly harder. The Start-up Visa Program requires a letter of support from a designated organisation, has intake caps and long processing times, and study and work permit volumes have been cut. Fourth, Canadian buyers expect bilingual labelling in English and French for consumer products, and Quebec’s language rules go further. Fifth, distance and winter logistics raise distribution cost. Sixth, until the CEPA concludes there is no preferential tariff, so Indian goods pay Canada’s most favoured nation duty, and Canada’s own trade priorities sit with the United States and Mexico under CUSMA.

How to apply

Decide between federal incorporation with Corporations Canada and provincial incorporation. Federal incorporation requires at least 25 percent of directors to be resident Canadians, which is why most foreign owned businesses incorporate in Ontario or British Columbia, neither of which has a director residency requirement.
Run a NUANS name search, or the provincial equivalent, to confirm the proposed name is available and not confusing with an existing name or trademark.
Prepare and file the Articles of Incorporation with Corporations Canada or the provincial registrar, setting out the share structure, registered office and first directors.
Appoint directors and, where the jurisdiction requires it, ensure the resident Canadian director threshold is met before filing.
Maintain the corporate records book including the register of individuals with significant control, which federal and most provincial corporations must now keep and in some cases file.
Register extra-provincially in every other province where you have an office, employees, agents or a place of business, since a company incorporated in one province does not automatically have standing in another.
Obtain a Business Number from the Canada Revenue Agency, then open the specific accounts you need: corporation income tax, GST or HST, payroll deductions, and import-export.
Register for provincial sales tax where applicable. Quebec has QST, British Columbia, Saskatchewan and Manitoba have their own PST, while the harmonised HST provinces are covered by the CRA registration.
Open a Canadian business bank account. Banks generally want the incorporation documents, the Business Number, the significant control register and identification for directors and beneficial owners.
Register with the provincial workers compensation board, for example WSIB in Ontario or WorkSafeBC in British Columbia, before employing anyone, and comply with provincial employment standards on hours, overtime and termination.
Set up payroll deductions for income tax, Canada Pension Plan and Employment Insurance, and remit to the CRA on the required schedule.
Obtain product approvals and licences before selling. Health Canada handles drugs, medical devices, natural health products and cosmetics, and the Canadian Food Inspection Agency handles food, with Safe Food for Canadians licensing for importers.
Ensure labelling meets Canadian requirements, including bilingual English and French labelling for consumer products and the additional French language obligations that apply in Quebec.
Set up transfer pricing documentation and an intercompany agreement with the Indian parent, and consider thin capitalisation limits before funding the Canadian entity with intercompany debt.

What the trade actually looks like

→ India sells

Pharmaceutical productsNamed first in the MEA list of India's exports to Canada. Requires Health Canada establishment licensing and product authorisation.
Machinery parts and mechanical appliancesEngineering components and industrial equipment.
Iron and steel articles and engineering goodsStructural and fabricated steel products alongside general engineering exports.
Electronic goods and organic chemicalsBoth listed among India's major export lines to Canada.
Jewellery, gems and precious stonesSold both to the diaspora retail market and to mainstream Canadian jewellery chains.
Clothing, textile articles and seafoodConsumer facing lines where the Indian diaspora market provides an accessible entry point.

← India buys

PulsesNamed first among India's imports from Canada. Lentils and peas are a large and politically sensitive flow into the Indian food market.
Fertilisers, particularly potashCanada is a major potash supplier and this is strategically important to Indian agriculture.
Mineral fuels and wood pulpEnergy products and pulp for the Indian paper industry.
Gems and precious stones including diamondsRough diamonds feeding the Indian cutting and polishing industry.
Aircraft parts and machinery partsAerospace components and capital equipment.
Paper, paperboard and iron and aluminium scrapRecyclable metal scrap is a significant input for Indian secondary metal production.

Treaties and agreements with India

Double Taxation Avoidance Agreement Signed 11 January 1996, in force 6 May 1997

Prevents the same income being taxed in both countries and caps withholding tax on dividends, interest, royalties and technical service fees. It also sets the permanent establishment threshold, which matters for Indian IT firms placing staff at Canadian client sites and for construction or installation projects, where an extended site presence creates a Canadian taxable presence.

India Canada Comprehensive Economic Partnership Agreement (CEPA) Under negotiation as of August 2026

Discussed during the Prime Ministerial exchanges of 2025 and 2026, with a stated objective of doubling bilateral trade to USD 50 billion by 2030. Until it concludes, Indian goods pay Canada's most favoured nation duty with no preference, so price accordingly and treat announced targets as direction rather than current entitlement.

India Canada space cooperation arrangement Discussed during the Canadian Prime Minister's visit to India in March 2026 under an existing MoU

Provides for an implementation arrangement between the two space agencies and their private sectors to operationalise joint projects and technical cooperation in emerging domains. Relevant for Indian space, satellite services and downstream analytics companies looking for Canadian partners and government backed projects.

Audiovisual Co-Production Agreement and cultural MoU Co-production agreement in place; culture MoU signed during the Canadian Prime Minister's visit, February to March 2026

The co-production agreement lets an Indian and a Canadian producer treat a film as a national production in both countries, unlocking Canadian federal and provincial production incentives and easier crew mobility. The 2026 MoU extends collaboration across arts, heritage, audiovisual media, music and creative industries.

Which company type to use

Federal corporation under the Canada Business Corporations Act	Incorporated with Corporations Canada, name protected across the country. At least 25 percent of directors must be resident Canadians, which is often the deciding constraint for a foreign owned business.
Ontario or British Columbia provincial corporation	Neither province imposes a director residency requirement, so these are the usual choices for wholly foreign owned companies. You must still register extra-provincially to operate elsewhere in Canada.
Extra-provincial registration of a foreign corporation (branch)	The Indian company registers to carry on business in a province without creating a separate Canadian entity. The Indian parent bears liability and is taxable in Canada on income attributable to the branch, with a branch tax on top.
Unlimited Liability Company (in Alberta, British Columbia or Nova Scotia)	Used almost exclusively for cross border tax structuring with United States parents because of its treatment as a flow through entity. Shareholders have unlimited liability, so it is rarely right for an Indian owned business.
Partnership or limited partnership	Flow through for tax purposes and common in real estate and investment funds. General partners have unlimited liability, and a foreign partner creates its own Canadian filing obligations.
Sole proprietorship	Registered provincially, cheap and simple, but with unlimited personal liability and it requires the owner to have Canadian work authorisation. Not suitable for an inbound business of any size.

Visas and tax

Getting yourself there

The Start-up Visa Program is the main founder route and leads directly to permanent residence, but it needs a letter of support from a designated venture capital fund, angel group or incubator, and it has intake caps and long processing times. The Intra-Company Transferee work permit is often faster, letting an Indian parent move executives, managers or specialised knowledge staff without a Labour Market Impact Assessment. Express Entry covers skilled permanent residence.

What you will pay

The net federal corporate income tax rate on general active business income is 15 percent, and 9 percent on the first CAD 500,000 of active business income for Canadian-controlled private corporations. Provincial or territorial corporate tax applies on top, so combined general rates run roughly from about 23 percent in the lowest provinces to about 30 percent in the highest. GST is 5 percent federally, replaced by HST at higher combined rates in several provinces, with separate provincial sales taxes in Quebec, British Columbia, Saskatchewan and Manitoba. A Double Taxation Avoidance Agreement with India exists, signed on 11 January 1996 and in force from 6 May 1997.

Indian government support for this market

Pharmaceuticals Export Promotion Council of India (Pharmexcil)

The Department of Commerce council for India's leading export line to Canada. Canada is a regulated market where Health Canada controls establishment licensing and product authorisation, and Pharmexcil supports members on dossier preparation, GMP inspection readiness and regulatory queries, and raises market access barriers through official channels.

Federation of Indian Export Organisations (FIEO)

The apex export body under the Department of Commerce. It issues Registration cum Membership Certificates, organises Canadian buyer seller meets and delegations to Toronto and Vancouver, and coordinates with the High Commission of India in Ottawa and the consulates on commercial disputes and market entry.

Engineering Export Promotion Council of India (EEPC India)

The Department of Commerce council for engineering goods, machinery parts, iron and steel articles and auto components, several of which are among India's largest exports to Canada. It runs Canadian trade fair participation, helps members with CSA and other North American conformity requirements, and publishes market intelligence on Canadian procurement.

Export-Import Bank of India (India Exim Bank)

The government owned development finance institution. It provides overseas investment finance and term loans to Indian companies acquiring or establishing Canadian subsidiaries, plus buyer's credit that allows your Canadian entity to extend competitive credit terms, which matters where Canadian distributors expect 60 to 90 day payment.

Frequently asked questions

Do I need a Canadian director to incorporate in Canada?

Federal incorporation requires at least 25 percent of directors to be resident Canadians. Ontario and British Columbia do not have this requirement, so most foreign-owned businesses incorporate there instead.

What are the main steps to set up a business in Canada from India?

Run a NUANS name search, file Articles of Incorporation with the provincial registrar, obtain a Business Number from the CRA, register for provincial sales tax, open a Canadian bank account, register with workers compensation, and set up payroll deductions.

Do I need to register in multiple provinces?

Yes. A company incorporated in one province must register extra-provincially in every other province where it has an office, employees, agents or a place of business to have legal standing.

What product labelling rules apply in Canada?

Consumer products must have bilingual English and French labelling. Quebec has additional French language obligations. Health Canada regulates drugs and cosmetics; the CFIA handles food imports.

What taxes and registrations do I need for payroll?

Set up payroll deductions for income tax, Canada Pension Plan and Employment Insurance, remitted to the CRA. Register with the provincial workers compensation board before hiring.

What is the current India-Canada trade relationship?

Two-way goods trade was CAD 13.55 billion in 2025. A Comprehensive Economic Partnership Agreement is under negotiation to double bilateral trade to USD 50 billion by 2030.

Before you apply: confirm every date, fee and eligibility rule on the official website linked on this page. Public and Policy is an independent portal, not a government body, and details change without notice.