As tensions build following Prime Minister Justin Trudeau’s statement that police are looking into “credible allegations” linking New Delhi’s operatives to the death of Sikh separatist leader Hardeep Singh Nijjar, trade discussions between India and Canada have been hampered.

On Tuesday, New Delhi called the accusations “absurd” and urged Canada to take action against any anti-Indian groups present on its soil.

What’s at risk for both nations is listed below:

How Do Trade Negotiations Change?

Just three months after both countries declared they hoped to sign an initial agreement this year, Canada announced this month that talks on the planned treaty with India had been put on hold.

According to industry projections, the Comprehensive Economic Partnership Agreement (CEPA) between Canada and India could increase bilateral commerce by up to $6.5 billion, resulting in a $3.8 billion to $5.9 billion increase in Canada’s GDP by 2035.

What Are The Main Trade Goods?

Consistent growth has led to an increase in goods commerce to $8 billion in 2022, with $4 billion in exports from India to Canada and $4 billion in imports from Canada.

Fertilisers and energy materials like coal, coke, and briquettes are among Canada’s top imports, whereas India exports consumer goods, clothing, and engineering goods like car parts, aviation parts, and electronic items.

According to Trading Economics/UN Comtrade data, Canada’s main export to India in 2022 was fossil fuels and allied goods worth almost $1 billion, followed by fertilisers worth about $748 million and wood pulp and plant fibres worth approximately $384 million.

One of the largest suppliers of the fertiliser element potash is Canpotex of Canada. Three Indian enterprises that completely rely on fertiliser imports inked an MoU with Canpotex in September 2022 to import 1.5 million metric tonnes of fertiliser annually for three years.

The majority of Indian exports last year were pharmaceutical products, worth about $418 million, followed by iron and steel products, costing about $328 million, and machinery, nuclear reactors, and boilers, worth about $287 million.

Canadian farmers have benefited from India’s rising demand for imported lentils, and Indian software and pharmaceutical industries have increased their market share in Canada.

What Is The Investment Position?

Canadian portfolio investors have invested billions of dollars in Indian debt and equity markets, ranking Canada as the 17th largest foreign investor in India with more than $3.6 billion invested since 2000.

By the end of the previous fiscal year in March 2023, the Canadian Pension Plan (CPP) had boosted its investment in Indian markets to roughly $15 billion, in sectors like real estate, renewable energy, and finance.

The Caisse de dépôt et placement du Québec (CDPQ), which had investments worth C$8 billion ($6 billion) as of Dec. 31, 2022, and the Ontario Teachers’ Pension Plan (OTPP), which had investments worth more than $3 billion as of last year, are two other significant pension funds having significant exposure to India.

How has business benefited from this?

While over 30 Indian companies, including infotech giants TCS, Infosys, and Wipro, have invested billions of dollars in Canada and generated thousands of jobs, over 600 Canadian businesses, including Bombardier and SNC Lavalin, are well-represented in India.

What Function Do Indian Students Play in Canada?

India has been the top source country for foreign students in Canada since 2018.

According to the Canadian Bureau of International Education, their number increased by 47% to close to 320,000 in 2022, making up roughly 40% of all international students. This aids universities and colleges in providing domestic students with subsidised education.

What Does This Mean for Sikhs?

Since many Sikh families in Punjab, a Sikh-majority state in India, have relatives in Canada who send millions of dollars back home, many observers believe the deteriorating relations could harm the economic interests of these families.

According to Canada’s 2021 census, the proportion of Sikhs has increased to 2.1%, more than doubling in 20 years, as a huge number of Sikhs have emigrated from India in search of employment and higher education.

(Adapted from LiveMint.com)

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