Prime Minister Stephen Harper, whose minority government is eagerly courting Indo-Canadian voters and India's nuclear industry market, made the announcement while at a Commonwealth leaders summit in Port of Spain, Trinidad.
This agreement is a testimony to the undeniable potential that Canada and India can offer each other and the world, Mr. Harper said in a statement after meeting with Indian Prime Minister Manmohan Singh.
Indias civilian nuclear energy market is be worth anywhere from $25-billion to $50-billion in business opportunities over the next 20 years.
The Conservative government declined to release the text of the India-Canada deal, however, saying it would only be released when implementing legislation is tabled in Parliament. The minority Tory government will require the support of MPs from one opposition party in order to pass the agreement.
Indo-Canadian relations have been cool for 30 years. Canada was furious when India developed a nuclear-weapons program in 1974 by misappropriating Canadian nuclear-reactor technology.
But over the past two years, both countries have been attempting to improve relations, which should be close, if only because more than a million Canadians are of Indian ancestry, with only China sending more immigrants here each year.
There have been 11 ministerial visits to India for almost three years, including five this year alone.
The gradual and by no means total evolution of the Indian economy from state control and high tariffs toward more open-market principles has contributed to white-hot economic growth. In the midst of a global recession, India's economy will expand by 6 per cent this year.
With growth comes hunger for energy. India's 17 nuclear reactors provide only 2.5 per cent of the country's electricity, but that figure is expected to double within a decade.
Former U.S. president George W. Bush negotiated an agreement in which India separated its civilian and military nuclear programs, subjecting the former to the safeguards of the International Atomic Energy Agency. France followed suit, and already has a contract to provide India with two new reactors. Canada wants to tap this market as well.
Resistance comes from those who point to India's unreliability in keeping its word when it comes to nuclear-energy safeguards. And there is the question of whether such an agreement would also include the sale of uranium to fuel Indian power plants. Australia, another major supplier of uranium, is resisting selling uranium to India unless it signs the Nuclear Non-Proliferation Agreement, which is unlikely, given that both India and its rival Pakistan are nuclear powers.
But the fact remains that Canada's hand is weak and India's strong.
India and China are the two big markets for nuclear-energy technology, with dozens of new reactors planned or under construction.
If Canada wants to have any hope of keeping its nuclear-energy industry alive, it must reach civilian nuclear agreements with both countries. And there is talk in Ottawa that Atomic Energy of Canada, Ltd. could enter into technology, marketing or even ownership partnerships with the Indians.