Sunday, May 19

Could the Strained Relationship Between India & Canada Affect Trade?

India & Canada recently had a falling out in their relationship. They both decided to send some of each other’s diplomats back home because of accusations involving a person named Hardeep Singh Nijjar, who is linked to a group some consider as terrorists. However, this disagreement might not have a big impact on their trade, meaning they can still do business together as usual.

The relationship between India & Canada is going through a rough patch. They’ve decided to send some of each other’s diplomats back home. This happened because Canada’s Prime Minister, Justin Trudeau, said that people from the Indian government were connected to the killing of a person called Hardeep Singh Nijjar, who’s linked to a group some consider as terrorists. This disagreement might make their relationship worse, but it might not have a big impact on their trade, which is like buying and selling things between the two countries. So, they can still do business together, even if they’re not getting along well right now.


Could the Strained Relationship Between India & Canada Affect Trade?
Could the Strained Relationship Between India & Canada Affect Trade?


Canada and India are in a bit of a diplomatic spat. Canada sent home a high-ranking Indian diplomat, and India did the same with a senior Canadian diplomat. This happened because Canada’s Prime Minister, Justin Trudeau, accused Indian government agents of being involved in the killing of someone named Hardeep Singh Nijjar, who supported Khalistan. This back-and-forth could strain their relationship, but it might not affect their trade or business dealings much.

A high-ranking government official mentioned that talks between India and Canada about a free trade agreement have stopped for now. This pause is because of some political problems, although they didn’t specifically mention the Khalistan matter, which has caused tension between the two countries. The negotiations will continue when these political issues are resolved.

On September 10, Prime Minister Narendra Modi told Canada’s Prime Minister Justin Trudeau that India is very worried about some extremist groups in Canada. These groups are doing things that could harm India, like trying to break it apart and being violent towards its diplomats. They’re also making threats against the Indian community in Canada. This has caused tension between India and Canada. Now, let’s see how this affects their relationship and their trade deals.

Here’s a simpler version of the trade information between India and Canada:

  • Canada is the 18th largest foreign investor in India, with investments totaling about $3,306 million from April 2000 to March 2023. This investment makes up around 0.5% of all foreign investments in India.
  • In 2022, India was Canada’s ninth-largest trading partner, indicating that they do significant business together.
  • Services and infrastructure projects account for a significant portion (about 40.63%) of the foreign investments from Canada into India.
  • More than 600 Canadian companies operate in India, and over 1,000 Canadian companies are actively seeking business opportunities in the Indian market.
  • India’s exports to Canada include items like pharmaceuticals, gems and jewelry, textiles, and machinery.
  • Canada’s exports to India consist of products such as pulses, timber, pulp and paper, and mining-related goods.
  • In 2022, India received nearly $859.83 million in personal remittances from Canada. These are funds sent by individuals living in Canada to their families in India, according to data from the World Bank.

So, despite recent diplomatic tensions, India and Canada have significant economic ties involving trade, investments, and personal remittances.

Despite the recent tensions between India and Canada, experts believe that it’s unlikely to have a major impact on their trade and investments. The reason is that the economic relationship between the two countries is largely driven by commercial interests. They trade in products that complement each other rather than directly competing.

In other words, India and Canada specialize in different types of goods, so their trade relationships may not be severely affected by the diplomatic tensions. According to experts, Canadian pension funds will likely continue to invest in India because of its large market and the potential for good returns on investment.

As of the end of 2022, Canadian pension funds had invested over $45 billion in India, making it the fourth-largest recipient of Canadian foreign investment globally. These investments are primarily in sectors like infrastructure, renewable energy, technology, and financial services.

So, while there may be political tensions, it’s business as usual for trade and investments between India and Canada.

Just a reminder, the opinions and advice mentioned earlier are from specific analysts, experts, and broking companies, and they don’t represent the views of ‘read story’. Before making any investment decisions, it’s always a good idea to consult with certified experts to get personalized guidance and ensure you’re making the right choices for your investments.

Also read: Tata Consumer Shares Surge by 4% as Company Addresses Speculation About Haldiram’s Stake Sale

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