Exploring India-Canada Relations: Bilateral Trade, Causes of Strain, and Potential Consequences | Explained
The bilateral relations between India and Canada have reached a new low following Canadian Prime Minister Justin Trudeau’s visit to India for the G20 Summit and his bilateral talk with PM Narendra Modi. During Trudeau’s visit, PM Modi expressed India’s concerns about the ongoing anti-India activities of extremist elements in Canada. As a result, negotiations on a bilateral free trade agreement have been canceled. Recently, Trudeau has accused India of being involved in the killing of Khalistani terrorist Hardeep Singh Nijjar. This has led to the expulsion of top diplomats from both countries.
The Comprehensive Economic Partnership Agreement (CEPA) negotiations between India and Canada have been paused. The agreement aims to significantly reduce or eliminate customs duties on traded goods, liberalize trade in services, and attract investments. The CEPA could potentially boost bilateral trade by $6.5 billion and bring significant GDP gains for Canada. The talks are expected to resume after the resolution of the current issues between the two countries.
In terms of bilateral trade, there has been steady growth, reaching $8 billion in 2022, with Indian exports to Canada amounting to $4 billion. Indian demands for imported lentils have benefited Canadian farmers, while Indian pharmaceutical and software companies have expanded their presence in the Canadian market. Major imports from Canada include energy products, fertilizers, and Indian exports include consumer goods, garments, and engineering products.
Canada is also a significant investor in India, with more than $3.6 billion invested since 2000. Canadian Pension Funds have cumulatively invested over $55 billion in India. Canada has a large Indian diaspora, with Indian-origin population accounting for 3 percent of Canada’s population. The country is also a popular destination for Indian students, with nearly 320,000 studying there.
The recent rift between India and Canada is due to the presence and activities of pro-Khalistani groups in Canada. These groups have been involved in attacks on Indian missions, anti-India activities, and desecration of temples. Despite India’s concerns, Canada has shown unwillingness to rein in these separatist elements. Trudeau’s inaction suggests his political messaging to the Khalistani elements as he seeks support from the Sikh diaspora.
During their bilateral meeting, PM Modi conveyed India’s concerns about the anti-India activities to Trudeau. Trudeau, on the other hand, emphasized Canada’s commitment to freedom of expression, peaceful protest, and pointed out that the actions of a few do not represent the entire Sikh community or Canada. Trudeau has also stated that his government is actively investigating the allegations linking Indian government agents to the murder of Hardeep Singh Nijjar.