Ottawa: Relations between India and Canada have hit an unprecedented low as New Delhi downgraded relations after its High Commissioner Sanjay Kumar Verma was named as a 'person of interest' along with other diplomats over the killing of India-designated Khalistani terrorist Hardeep Singh Nijjar. Amid concerns over how this would affect trade between the two countries, Canada has assured support to commercial ties.
Canadian Trade Minister Mary Ng on Tuesday sought to assure the country’s business community that she is committed to supporting the well-established commercial ties between the two countries. "I want to reassure our business community that our government remains fully committed to supporting the well-established commercial ties between Canada and India," she said.
Ng, the Canadian minister of export promotion, international trade and economic development, said Canada's Trade Commissioner Service will continue to assist and provide resources to Canadian companies operating in India. “Let me be clear: Canada stands firmly by its businesses. We will work closely with all Canadian enterprises engaged with India to ensure these important economic connections remain strong,” she added.
Will the escalating diplomatic row harm India-Canada trade?
According to India Brand Equity Foundation, Canada and India achieved a bilateral trade relationship that reached $8.27 billion in fiscal year 20203 and $5.3 billion during April-November 2023. In 2022, India was Canada’s ninth largest merchandise trading partner in the Indo-Pacific region, the 13th largest merchandise trading partner globally and the 14th largest destination for merchandise exports.
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As of September 2023, Canada was ranked as the 17th largest foreign investor in India, having made cumulative investments amounting to $3.6 billion since April 2000. Canadian investments constitute approximately 0.56 per cent of the total foreign direct investment (FDI) inflow into India. More than 600 Canadian companies and organizations have established a presence in India.
Despite the bilateral commercial relationships between India and Canada standing at over $100 billion, including $70 billion of Canadian portfolio investment into India, there are some concerns that the deteriorating relations between the two countries will probably impact trade relations and the immigration of students.
What happened between India and Canada?
The already frosty ties between India and Canada deteriorated further when Ottawa tried to implicate Indian High Commissioner Sanjay Kumar Verma and other diplomats in an investigation linked to Nijjar's killing last year. Rejecting the allegations, India not only called back its High Commissioner from Canada but also expelled six of its diplomats from New Delhi.
“Prime Minister Trudeau’s hostility to India has long been in evidence. In 2018, his visit to India, which was aimed at currying favour with a vote bank, rebounded to his discomfort. His Cabinet has included individuals who have openly associated with an extremist and separatist agenda regarding India. His naked interference in Indian internal politics in December 2020 showed how far he was willing to go in this regard,” it said.
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Canadian Prime Minister Justin Trudeau accused India of engaging in activities that posed a significant threat to public safety and ordered the expulsion of six Indian diplomats from Canada, marking a further escalation of the dispute. He claimed India had refused to cooperate with the investigation, despite Canada not presenting any evidence of India's involvement in Nijjar's killing.
“We will never tolerate the involvement of a foreign government in threatening and killing Canadian citizens on Canadian soil – a deeply unacceptable violation of Canada’s sovereignty and of international law... Canada will always defend the rule of law and the fundamental principles on which free and democratic societies are based," he said.
Impact on trade, immigration of students
According to a report that analysed the possible fallouts for the Justin Trudeau-led government with straining ties with India, the row could impact the immigration of students, trade relations, and Canada's Indo-Pacific strategy. As per the report, Canada receives international students from India in abundance, the largest from any country, with over 40 per cent of the more than 800,000 international students in 2022 coming from India. In 2022, the Indian diaspora in Canada increased to over one million.
However, a drop in the applications by Indian students was witnessed due to the recent strain of relations between India and Canada. "A reduction in the flow of Indian immigrants, which constitute almost one in five of all recent immigrants to Canada, could be even more devastating than a deterioration of trade relations," the report said.
Furthermore, India's retaliatory measures, such as imposing tariffs or restricting imports, are likely to impact Canadian businesses, particularly those in the agriculture and manufacturing sectors, the report stated. "Due to ongoing tensions between Canada and India, negotiations have been halted, and it will impact Canada more than India. The best example is pulses in this case," it said.
(with agency input)
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