Prime Minister Stephen Harper presented his Indian counterpart, Narendra Modi, with the so-called "Parrot Lady" sculpture during an event Wednesday on Parliament Hill.
The life-sized, red sandstone statue, believed to be some 900 years old, depicts a dancing woman with a parrot resting on her head. The woman is meant to be seen as a "naayika" — Hindi for heroine — while the bird is her friend or confidante.
The pair shook hands as Harper declared his delight at being able to return the statute to its "rightful owner." Harper also presented Modi with a plaque to commemorate its return.
Modi expressed his gratitude, noting through an interpreter that the statue was being returned "with respect and love."
It's not clear precisely when it went missing from one of the several Khajuragho temples, a UNESCO World Heritage site, located near the town of Khajuragho in central India.
Images of naayikas are commonly seen in Hindu, Buddhist and Jain temples.
Cultural relations between Canada and India have been deepened as a result of the statue's return, Modi said.
So common are such depictions in the Khajuraho temples, India did not even realize the statue had gone missing at all until they were notified in 2011 that it had turned up on Canadian soil.
Even then, it wasn't until experts from the Archaeological Survey of India got involved that the statue's origins could be confirmed.
The two countries were able to exchange the sculpture despite India's lack of proper ownership papers, because both are signatories to a UN convention that allows the return of cultural property.
"Canada is pleased to return this antiquity to the government of the Republic of India," said Canadian Heritage spokesman Charles Cardinal.
"This is the first return of cultural property to India by the Government of Canada. It is an example of the successful co-operation of government departments and agencies working together to enforce the Cultural Property Export and Import Act.
"This return demonstrates Canada's ongoing commitment to prevent the illicit traffic of cultural property and to recover illegally imported goods."