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Does India-Canada's flaring tensions risk multi-billion trade, investment ties?.

Date: 20-09-2023
Subject: Does India-Canada's flaring tensions risk multi-billion trade, investment ties?
India on Tuesday woke up to the news that Canada has alleged Indian agents to have links with last year's murder of a Khalistani separatist leader Hardeep Singh Nijjar, which later New Delhi said to be "absurd and motivated".

On Monday, Canada had expelled a top Indian diplomat while it probed what their Prime Minister Justin Trudeau said 'credible allegations' that the Indian government probably had links to the murder. Hours after that, India today summoned Canadian High Commissioner to India, Cameron MacKay, and expelled a senior diplomat.

Amidst this and after reports of non-cordial talks between India's Prime Minister Narendra Modi and the Canadian counterpart during G20 Summit, where Modi conveyed to Trudeau India's concerns about extremist elements carrying anti-India activities in Canada, the business world must be brooding about looming impact on trade relations between the countries who have bilateral trade running into billions of dollars. In fact, the political developments had also led to a pause in negotiations for a fr ..

However, some experts said that the tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries. The economic ties are driven by commercial considerations, they said. Another advantage that goes on the behalf of continuing smooth trade hopes is that both India and Canada trade in complementary products and do not compete on similar products, PTI reported.

"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 told PTI.

Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.

Bilateral trade between India and Canada has grown significantly 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.

On investments, he 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 top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services. the fund has investments in companies ranging from ICICI Bank, Kotak Mahindra Bank, Paytm, Zomato, Nykaa, Delhivery to Wipro and Infosys.

Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty 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 told PTI.

India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.

In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.

According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.

Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.

Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.

Source Name : Economic Times

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