As India-Canada Relation Hits New Low, Here Is A Look At Their Trade Ties

Bilateral relations between India and Canada continue to hit new low for the last few days. Tensions between the two countries have been escalating and reached a new high when India on Tuesday decided to expel a senior Canadian diplomat after Ottawa expelled an Indian diplomat over the killing of Sikh separatist earlier this year.

Earlier on September 18, Canada stated it was "actively pursuing credible allegation" linking Indian government agents to the killing of Sikh separatist leader Hardeep Singh Nijjar. India rejected the allegations and called them "absurd and motivated".

Canada's Prime Minister Justin Trudeau said he discussed Nijjar's murder with Prime Minister Narendra Modi during the G-20 summit held last week in New Delhi. Canadian PM said he had told Modi that any kind of involvement by the Indian government would be unacceptable and asked for cooperation in the investigation.

Amid all these developments, experts are hopeful that current bilateral relations between India and Canada may not have any impact on trade and investment between the two nations and they think that economic relations are driven by commercial considerations, as per a PTI report.

Both India and Canada trade in complementary products and do not compete on similar products. "Hence, the trade relationship will continue to grow and not be affected by day-to-day events," Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.

Bilateral trade between the two countries witnessed significant growth in recent year and touched USD 8.16 billion in 2022-23.

India's exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada's exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products, added the PTI report.

On investments, Srivastava said that Canadian pension funds will continue investing in India on grounds of India's large market and good return on money invested. Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.

The key sectors for Canadian pension fund investment in India are renewable energy, infrastructure, technology, and financial services.

Meanwhile, Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the existing tense relations between India and Canada are certainly a cause for concern.

"However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations," Saraf said.

He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy. "In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada," Saraf said.