India-Canada Relations: Diplomatic Tensions, Trade Continuity

Despite recent diplomatic tensions, particularly following the accusations by Canada regarding India’s involvement in the murder of Sikh separatist leader Hardeep Singh Nijjar, both India and Canada have expressed confidence that these issues will not significantly disrupt their bilateral trade.

Diplomatic Dispute and Trade Stability

The tensions began when Canada linked India’s diplomats, including its high commissioner, to the murder of Nijjar, accusing India of targeting dissidents in Canada. India swiftly denied the accusations, calling them part of Prime Minister Justin Trudeau’s political agenda. However, despite these diplomatic strains, both countries’ officials remain optimistic about the continuity of trade relations.

India emphasized that their bilateral trade with Canada is not large enough to be immediately affected by the dispute. As of the last fiscal year, the bilateral trade amounted to US$8.4 billion, a slight increase from the previous year. Canada exports products like minerals, pulses, potash, and industrial chemicals to India, while importing pharmaceuticals, electrical equipment, and precious stones from India.

Canadian Investments in India

Canada’s economic presence in India remains significant. Canadian funds have invested over US$54 billion in India, and this is not expected to change due to the ongoing political tension. The trade minister of Canada, Mary Ng, reassured the business community, emphasizing that Canada’s government remains committed to supporting the robust commercial ties between the two countries.

Moreover, over 600 Canadian companies are operating in India, with sectors such as IT, banking, and financial services benefiting from this investment. The trade volume between the two countries also saw a 14% increase in both exports and imports in August 2024 compared to the previous year.

Looking Ahead

Despite the political disagreement, both India and Canada continue to affirm their strong economic ties. Canadian companies are expected to maintain their operations in India, which remains an attractive market for investment. The diplomatic fallout over Nijjar’s murder is unlikely to disrupt the ongoing trade relationships, with both countries focused on maintaining their mutual economic interests.