Diplomatic stand-off and war of words may not affect India-Canada trade relations after all: here is why

The bilateral ties between India and Canada have hit an all-time low as a result of Canadian allegations of the Indian government's involvement in extrajudicial killings on Canadian soil. On Monday, India and Canada took the extraordinary step of expelling each other's top diplomats, something that is usually expected from hostile nations or countries that are about to go to war.

CREDIT: AP

Indians in Canada

Canada is home to around 1.8 million people who were born in India or have Indian roots, accounting for around 5 per cent of the country's population. Canada still remains one of the favourite countries for Indian students and working professionals from India to migrate and settle.

However, with the current diplomatic fallout that started in September 2023, many observers believe that bilateral ties will take at least a decade or more to recover and become normal again.

CREDIT: AP

Will it be business as usual?

While this might be true for diplomatic relations, what seems to be unaffected by the fallout of the killing of Hardeep Singh Nijjar is trade ties.

Even as Canada announced a scale-down of diplomatic relations with India, both sides are hopeful that bilateral trade will be unaffected.

India Canada trade

Canada exports primarily minerals, pulses, potash, industrial chemicals, and gemstones to India and imports goods such as pharmaceuticals, marine products, electrical and electronic equipment, pearls, and precious stones.

More than 600 Canadian companies have a presence in India in sectors including IT, banking, and financial services, and more than 1,000 companies are actively pursuing business in the Indian market.

CREDIT: Unsplash

Canadian investments in India

In 2022, India was Canada¡¯s ninth-largest merchandise trading partner in the Indo-Pacific region, the 13th largest merchandise trading partner globally, and the 14th largest destination for merchandise exports.

As of September 2023, Canada was ranked as the 17th largest foreign investor in India, having made cumulative investments amounting to US$ 3.6 billion since April 2000.

'Business will not be affected'

"We are not immediately concerned about trade ties. Our bilateral trade with Canada is not very large," an Indian government official told Reuters.

Canadian Trade Minister Mary Ng reassured businesses that "our government remains fully committed to supporting the well-established commercial ties between Canada and India."

"Canada stands firmly by its businesses. We will work closely with all Canadian enterprises engaged with India to ensure these important economic connections remain strong,¡± she said.

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