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India, Canada relationship getting tense: Can it impact trade relations?
The India-Canada relationship hits new lows as both countries expel diplomats over accusations related to a Khalistani terrorist Hardeep Singh Nijjar. Trade may not be impacted.
India-Canada News: The India-Canada relationship is hitting new lows as both countries have announced the expulsion of diplomats of the other country after Canadian Prime Minister Justin Trudeau accused Indian government agents of having linkages in the killing of a Khalistani terrorist Hardeep Singh Nijjar.
Hours after Canada expelled a top Indian diplomat over Khalistani terrorist Hardeep Singh Nijjar's killing, India asked a senior Canadian diplomat to leave the country, said the Ministry of External Affairs on Tuesday. Earlier today, Canadian Prime Minister Justin Trudeau expelled a top Indian diplomat as he accused the Indian government agents of killing Khalistan supporter Hardeep Singh Nijjar in June this year.
Also Read: Live updates on India-Canada news
Mint reported earlier that a senior government official said on Friday that the negotiations between India and Canada on the free trade agreement (FTA), which resumed after a decade, have come to a halt due to political concerns.
Without citing the Khalistan issue, which created differences between the two countries, the official said negotiations will resume once the “political issues" are resolved.
"On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India's strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there," PTI reported.
Let's take a look at India-Canada ties and trade dealings.
India-Canada key trade data
According to Invest India, Canada is the 18th largest foreign investor in India with an overall investment of about $3,306 million from April 2000 to March 2023. Thus, Canadian investment represented about 0.5 per cent of the total FDI (foreign direct investment) inflows into India. 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.
Over 600 Canadian companies have a presence in India and over 1,000 Canadian companies are actively pursuing business in the Indian market, according to Invest India.
According to the data available at the Ministry of Commerce, India's total exports to Canada stood at $4,109.74 million in FY23 which was 0.9 per cent of India's total export of $450,958.43 million in the last financial year.
On the other hand, India's total imports from Canada in FY23 stood at $4,051.29 million which was nearly 0.6 per cent of India's total imports of $714,042.45 million for the year, Ministry of Commerce data showed.
According to a PTI report, India's exports to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada's exports to India include pulses, timber, pulp and paper, and mining products.
If we talk about personal remittances, in 2022, India received nearly $859.83 million in personal remittances from Canada, according to World Bank data.
India-Canada trade may not be impacted
As per a PTI report, experts believe 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.
Experts point out that India and Canada do not compete on similar products but trade in complementary products so trade relationships may not be affected by these events.
PTI quoted Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava saying 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 $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 PTI report said.
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Business NewsEconomyIndia, Canada relationship getting tense: Can it impact trade relations?
First Published:19 Sep 2023, 02:48 PM IST
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