The bilateral ties between India and Canada have hit a new low ever since the G20 Summit when Canadian Prime Minister Justin Trudeau visited India and held a bilateral talk with PM Narendra Modi. During Trudeau’s visit, PM Modi conveyed India’s strong concerns about the continuing anti-India activities of extremist elements in Canada.
Following Trudeau’s departure from New Delhi, the two countries announced cancelling negotiations on a bilateral free trade agreement. In a recent development, Trudeau has accused India of being involved in the killing of Khalistani terrorist Hardeep Singh Nijjar, who was fatally shot earlier this year.
Both India and Canada have expelled top diplomats from the respective countries amid soured relations. Amid the widening rift between the two countries, let’s take a look at the bilateral relations between the two countries and its economic implications.
Free Trade Agreement
Canada announced earlier this month that it had paused talks on the Comprehensive Economic Partnership Agreement (CEPA) with India, just three months after both said they aimed to seal an initial pact this year.
In March 2022, the two countries had decided to re-launch the CEPA negotiations and consider an interim agreement or Early Progress Trade Agreement (EPTA) that could bring commercial gains to both sides, The Indian Express said.
The two countries had held discussions on sectors including goods, trade remedies, rules of origin, origin procedures, services, institutional and core provisions, the report added.
In such agreements, two countries significantly reduce or eliminate customs duties on the maximum number of goods traded between them. They also liberalise norms for promoting trade in services and attract investments.
Indian industry was looking at duty-free access for products like textiles and leather besides easy visa norms for the movement of professionals. Canada has interests in areas like dairy and agricultural products.
Industry estimates show the CEPA between Canada and India could boost two-way trade by as much as $6.5 billion, yielding a GDP gain of $3.8 billion to $5.9 billion for Canada by 2035, a report in Reuters said.
A senior government official has said that India-Canada talks on the Comprehensive Economic Partnership Agreement are expected to resume only after the resolution of the issues between the two countries.
There has been a steady growth in the goods trade reaching $8 billion in 2022, with Indian exports to Canada touching $4 billion, making New Delhi Canada’s 10th largest trading partner; while imports from Canada also worth $4 billion.
In the current financial year, during April-June, India’s exports to Canada stood at US$ 911 million, while imports from Canada were worth US$ 990 million.
India’s growing demand for imported lentils has benefited Canadian farmers, while Indian pharmaceutical and software companies have expanded their presence in the Canadian market.
Major imports from Canada include energy products such as coal, coke and briquettes, besides fertilizers, while India exports consumer goods, garments, engineering products such as auto parts, aircraft equipment, and electronic items.
More than 600 Canadian companies, including Bombardier and SNC Lavalin, have a strong presence in India, while more than 30 Indian companies, such as infotech majors TCS, Infosys, Wipro have invested billion of dollars in Canada, creating thousands of jobs.
Canadian Investments in India
Canada is India’s 17th largest foreign investor, pouring in more than $3.6 billion since 2000, while Canadian portfolio investors have invested billions of dollars in Indian stock and debt markets.
Canadian Pension Funds have cumulatively invested over 55 billion US dollars in India, according to The Indian Express. Canada’s Ontario Teachers’ Pension Plan has invested over $3 billion in India and India is expected to become one of the key markets where the fund was to reach $300 billion in net assets.
Canada accounts for one of the largest Indian diasporas in the world. Indian-origin population accounts for 3 percent of Canada’s population.
The country has 1.6 million people of Indian origin, more than 700,000 NRI’s and a Sikh population of more than 7,70,000 (about 2 percent of the total population). The Sikh population in the country is the highest outside of Punjab.
Since 2018, India has been the largest source country for international students in Canada.
In 2022, their number rose 47% to nearly 320,000, accounting for about 40% of total overseas students, the Canadian Bureau of International Education says, which also helps universities and colleges provide a subsidised education to domestic students.
The recent cause behind the soured relations is the pro-Khalistan groups operating in Canada and organising crimes in the country and in India. Pro-Khalistani groups including banned organisation Sikh for Justice have been involved in attack on India missions, anti-India activities and desecrating temples in Canada.
In June, a video emerged on social media that showed a float depicting the assassination of Indira Gandhi. It was reportedly part of a parade that was organised by some Khalistani elements in Brampton.
In July, India summoned the Canadian envoy and issued a demarche over the increasing activities by pro-Khalistani elements in Canada, days after posters featuring names of India’s senior diplomats serving in Canada featured in some posters in certain areas in that country. India also complained to Canadian authorities over incidents of security lapse at the Indian consulate in Vancouver.
However, Canada’s unwillingness to rein in separatist Khalistani elements and inaction on the attacks on temples and Indian mission has shown the country is not serious in entertaining India’s concerns. Despite India’s repeated reminders, Trudeau has said his country will always defend freedom of peaceful protest and freedom of expression despite India’s concerns over the increasing Khalistani activities in Canada.
Trudeau’s inaction also suggests his political messaging to the Khalistani elements in Canada as he woos the Sikh diaspora, which makes a considerable support base for the Liberal Party.
While Trudeau was in India, a Khalistan referendum was being held in Canada by Sikhs for Justice. On September 10, following a meeting between Modi and Trudeau on the sidelines of the G20 Summit, India issued a strongly-worded statement.
What Has the Two Leaders Said
During the bilateral meeting between Modi and Trudeau on September 10, the Indian Prime Minister conveyed to his Canadian counterpart New Delhi’s strong concerns about the continuing anti-India activities.
“He (PM Modi) conveyed our strong concerns about continuing anti-India activities of extremist elements in Canada. They are promoting secessionism and inciting violence against Indian diplomats, damaging diplomatic premises, and threatening the Indian community in Canada and their places of worship,” a government statement said.
“The nexus of such forces with organized crime, drug syndicates and human trafficking should be a concern for Canada as well. It is essential for the two countries to cooperate in dealing with such threats,” the statement added.
Trudeau, during a press conference, said, “Canada will always defend freedom of expression, freedom of conscience, and freedom of peaceful protest and it is extremely important to us.”
“At the same time, we are always there to prevent violence and to push back against hatred. I think on the issue of the community, it is important to remember that the actions of the few do not represent the entire community or Canada,” Trudeau added.
Trudeau, in his latest statement, has also said his government is “actively pursuing credible allegations” linking Indian government agents to the murder of Hardeep Singh Nijjar.