A Commercial Tango in Canada India Diplomatic Fencing

by Dr. Shahid Hameed

The Canadian Prime Minister, Justine Trudeau, took an assertive and principled stance to pursue the case of alleged Indian involvement in the targeted killing of a Canadian citizen. It appears to be as if India has launched a worldwide operation against such organizations that demand self-determination from the Indian state. As several former members of anti-India organizations were targeted on the same pattern as Najjar in Canada. The covert operations of Indian secret agencies on Canadian soil are taken as a serious matter of concern by the government of Canada resulting in the suspension of further trade talks with India. Prime Minister Trudeau publicly announced his discussions with Indian Prime Minister Modi regarding India’s involvement, thereby revealing Canada’s primary focus during the G-20 discussions. On the other hand, India has shown an aggressive diplomatic reaction and summoned the high commissioner of Canada to India and expelled a senior Canadian diplomat. Shortly after this, India took another harsh step by announcing the suspension of visa services for Canadian citizens.

Indian foreign minister S.J Shanker has been critical of Canadian ownership of Sikh citizens and considered it a part of Trudeau’s domestic politics. The recent political shift in Indian foreign policy moving from Russia to the West, necessitates a smooth transitional space. The global power contestation provided India an opportunity to become closer to the US; however, the US could not afford to give any sign of unconditional support to India and to displease its lifetime partners like Canada. By and by, spinning political tension between India and Canada may increase pressure on the US to play its role in easing the situation. Not to ignore the fact that commercial interests of both India and Canada may compel both states to ease current distrust and extreme political stance towards each other.

In 2022, the bilateral trade between Canada and India reached up to Canadian $ 12 Billion which is nearly half of the recent figures of India-Russia trade amounting to US $ 27.1 Billion. India’s look West policy has less economic and more strategic objectives. The realization in New Delhi that the West is in dire need of India to engage China increased India’s confidence to perform such an act. Historically, there are shreds of evidence of Canadian feelings of betrayal by India, including the misuse of nuclear technology transferred to India for peaceful purposes. At the same time, India also violated the mutual framework on counter-terrorism and violent extremism between Canada and India. The diplomatic fencing between both states is not a mere situational issue, but it has deep societal and political dimensions, with five major commercial ramifications.

First, the Ministerial Dialogue on Trade and Investment (MDTI) which is a flagship platform particularly for India to enhance bilateral trade. It may get affecte, and Canada may further impose sanctions on the bilateral trade and commerce sector. The Ottawa declaration of 6th MDTI on May 08, 2023, is still deferred and the seriousness of the issue may lead to a complete seizer and an ultimate decline in trade and investments on both sides.

Second, the upward forecast for the financial and trade matters between Canada and India is based upon a normal set of diplomatic relations. However, the estimates for 2035 trade volume are not plausible under such abnormal political conditions between both countries. India is not currently among the list of top five countries in Canadian export partnerships.

Third, a valuable portion of the Sikh community is contributing to the Indian economy through remittances. There is also a possibility of comparatively less inflow of foreign capital in the shape of remittances due to the political ramifications of Indian illegal actions against the Sikh community on Canadian soil.

Fourth, Canadian companies are heavily investing in India and playing a significant role in Indian economic growth. An increase in distrust between both countries can harm such investments while santions from the sides can further hamper such a economic collaborations.

The commercial interests of Air Canada, McCain Foods, Apotex Pharmachem India, Bombardier, Manga International Inc., SNC Lavalin and hundreds of other Canadian companies in India may face hurdles to continue their regular activities. The Indian companies in Canada may also have similar reparations. The situation however will directly influence investors from other Western countries. Although, the contemporary political circumstances particularly the US political interests give a maneuvering space to India however, this advantage is not absolute. Another aspect of India’s aggressive posture is their ability to restrict and impose sanctions on Canadian commercial entities in India. However, any such step will further deteriorate bilateral trust and may shape a new political landscape.

Fifth, the educational sector in Canada is one of the largest growing areas in terms of foreign cash inflows. For the last few years, this inflow has been dominated by the Indian students. An estimated 1 million students from India appeared in the English proficiency test to take admissions in Canadian universities which is the highest number in the last five years. The downward spiral in diplomatic relations between both countries will damage the commercial interest of the Canadian educational sector. India is spending nearly US $ 8 Billion on the education Industry of Canada. The deteriorated ties will ultimately reduce this huge direct inflow of cash revenues from India to Canada.


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