India-Canada row: Will multi-billion trade ties between two countries take a hit?


The India and Canada bilateral relation has seen a number of hurdles in recent times that have raised concerns about the trade ties with the latest flashpoint being Canada’s allegations of India link in death of Khalistani activist. Last week, following the G20 Summit in New Delhi, Canada postponed a trade mission to India that was due to travel in October.

Union Commerce Minister Piyush Goyal has confirmed that trade talks between India and Canada have been paused due to increasing pro-Khalistani activities and the Justin Trudeau-led Canadian government’s sympathies with Khalistani activists.

The bilateral relations between the two allies touched a new low after Canadian PM Justin Trudeau on Monday alleged that India’s involvement in the killing of Khalistani terrorist Hardeep Singh Nijjar, who was killed in a shootout in June this year.

Denying the charges, India on Tuesday said that the government “completely rejected” the Canadian PM’s allegations and said their political figures openly expressing sympathy for “such elements” remains a matter of deep concern.

Both India and Canada have expelled top diplomats from the respective countries amid soured relations.

Since the development, many experts have been discussing about the trade ties between the two major economies.

Trade between India and Canada

Bilateral trade between India and Canada has seen significant growth in recent years, reaching $8.16 billion in 2022-23, PTI noted. India’s exports ($4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India ($4.06 billion) include pulses, timber, pulp and paper, and mining products.

In Q1 FY2023-24, India’s exports to Canada were worth about $911 million, while imports from Canada were worth $990 million.

A PTI report stated India’s exports to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery. On the other hand, Canada’s exports to India include pulses, timber, pulp and paper, and mining products.

In terms of personal remittances, India received nearly $859.83 million in personal remittances from Canada in FY22, as per World Bank data.

According to industry projections, the Comprehensive Economic Partnership Agreement (CEPA) between Canada and India has the potential to enhance bilateral trade by up to $6.5 billion, leading to an estimated GDP increase of $3.8 billion to $5.9 billion for Canada by 2035.

Investment in India

The Invest India page on Canada shows the country is the 17th largest foreign investor in India with an overall investment of about $3,306 million from April 2000 to March 2023. the Canadian investment is about 0.5 per cent of the total FDI (foreign direct investment) inflows into India.

On the other hand, India was Canada’s ninth-largest trading partner in 2022. Services and infrastructure together accounted for 40.63 per cent of the total FDI investments from Canada to India.

More than 600 Canadian companies have a presence in India and more than 1,000 companies are actively pursuing business in the Indian market. A few notable names are Bombardier and SNC Lavalin.  

Canadian pension funds

The Canadian Pension Plan Investment Board (CPPIB) has made several investments in India. The recent filings show these investments totalled to over Rs 1 lakh crore.

CCPIB has made fund infusions in companies such as IT majors Wipro and Infosys,  top tier banks ICICI Bank, Kotak Mahindra Bank, new-age companies like Paytm, Zomato, Nykaa, Delhivery.

Company CPPIB take Stake value
Delhivery 6%  Rs 1,878 crore
Kotak Mahindra Bank  2.68% Rs 9,582 crore
Zomato  2.37% Rs 2,078 crore
Paytm  1.76% Rs 973 crore
Indus Towers 2.18% Rs 1,085 crore
Nykaa  1.47% Rs 625 crore
Wipro Not disclosed $11.92 miilion
Infosys Not disclosed $21.7 million
ICICI Bank Not disclosed $10 million

Experts view

Experts have said the fresh tensions between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, a PTI report said.

Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava told PTI that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.

Also Read: ‘Canada is new Pakistan, this is Trudeau’s real legacy’: Canadian PM gets slammed for ‘killing’ charges against India

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