The proposal was made at a bilateral meeting between India's commerce minister, Kamal Nath, and his Canadian counterpart, in Davos on Thursday.
Kamal Nath is understood to have conveyed to the Canadian minister that he would consider the proposal seriously. The proposed agreement is expected to cover trade in goods and services as also investment.
The Canadian side is very enthusiastic about the proposed agreement with India, according to an official accompanying the Indian commerce minister.
Canada has also indicated that if the Indian government is agreeable to further negotiations on this matter, it would be able bring to India a high-level delegation of trade,industry and government functionaries in April.
The growing interest in doing business in India also became evident at another meeting with a group of international business leaders on Thursday.
The minister was asked when the Indian government would open up the retail trade sector to foreign investment.
The business leaders explained that liberalising the retail trade sector would result in a sharp surge in foreign direct investment inflow into India in a short time.
Kamal Nath is reported to have conveyed India's apprehensions about opening up retail trade in view of the impact this might have on local employment.
The commerce minister acknowledged that allowing FDI in retail would also boost employment in the entire sector and, therefore, a holistic view of the proposal would be taken before arriving at a final decision.
The commerce minister's agenda of meetings during his stay at Davos includes meetings with European Trade Commissioner Pascal Lamy and US Trade Representative Robert Zoellick.
In addition, Kamal Nath will take part in a G-20 meeting of trade ministers, assembled here, to forge a united stand on the Doha Round as a run-up to the ministerial meeting scheduled to be held in Hong Kong later this year in December.
