1 month ago
The escalation in the diplomatic row between India and Canada will not have an impact on the bilateral trade and investment ties between the two countries, government sources said on Tuesday.
They also said that the bilateral trade value is not significant and Canadian funds can route their investments through countries like Singapore, the UAE and the US.
“India is a preferred investment destination,” they said, adding that investors in countries like the US are keen to invest in India.
One of the sources said that the industry in the US has indicated that opportunities worth USD 3 trillion are chasing India.
Canada is India’s one of the primary sources of lentils and now that can come from Australia, they said, adding that Indian students and professionals would also have huge opportunities in different countries.
The bilateral merchandise trade between India and Canada actually grew slightly from USD 8.3 billion in 2022-23 to USD 8.4 billion in 2023-24.
India’s imports from Canada increased to USD 4.6 billion, while exports saw a marginal dip, falling to USD 3.8 billion.
During April-July this fiscal, India’s exports stood at USD 1.3 billion, while imports were USD 1.37 billion.
Think tank Global Trade Research Initiative (GTRI) too has stated that the diplomatic tensions between India and Canada have so far not impacted the bilateral trade in goods between the two countries.
However, it added that as this dispute drags on, both nations will need to carefully manage their actions to avoid a full-blown economic fallout.
India on Monday announced withdrawing its high commissioner and other “targeted diplomats and officials” from Canada after strongly dismissing Ottawa’s allegations linking the envoy to an investigation into the killing of Sikh extremist Hardeep Singh Nijjar, in a major downturn in already frosty ties between the two nations.
India’s decision came shortly after Canadian Charge d’Affaires Stewart Wheelers was summoned to the Ministry of External Affairs (MEA) and was told bluntly that the baseless “targeting” of Indian High Commissioner Sanjay Verma and other diplomats and officials was “completely unacceptable”.
The strain started when Canadian Prime Minister Justin Trudeau accused India of involvement in the killing of a Canadian citizen and Sikh separatist leader.
This allegation led to a back-and-forth expulsion of diplomats and paused Free Trade Agreement (FTA) talks.
Over half a dozen rounds of talks have been held between the countries on the trade pact so far. In March 2022, the two countries re-launched negotiations for an interim agreement, officially dubbed as Early Progress Trade Agreement (EPTA). In such agreements, two trading partners either significantly reduce or eliminate customs duties on a maximum number of goods traded between them.
Besides, they also ease norms to promote trade in services and investments.
In the proposed pact, the Indian industry was looking at duty-free access for products like textiles and leather besides easy visa norms for the movement of professionals. Canada has interests in areas like dairy and agricultural products.
GTRI Founder Ajay Srivastava has earlier said that halting of India-Canada free trade agreement negotiations does not harm Indian trade interests as more than half of Indian products already enters Canada duty-free and would not have benefitted from this pact.
India has received USD 4 billion foreign direct investments in equity from Canada during April 2000-June 2024.
As per estimates, Canadian Pension Funds have cumulatively invested over USD 75 billion in India.
Over 600 Canadian companies have a presence in India and more than 1,000 companies are actively pursuing business in the Indian market.
Indian companies in Canada are active in fields such as Information Technology, software, steel, natural resources and banking sectors.
India’s major exports to Canada include gems, jewellery and precious stones, pharmaceutical products, ready-made garments, mechanical appliances, organic chemicals, light engineering goods, iron and steel articles.
Main importing commodities included pulses, newsprint, wood pulp, asbestos, potash, iron scrap, copper, minerals and industrial chemicals.
Education is a key area of mutual interest between the two countries. India is the largest source country of foreign students with over two lakh Indian students studying in Canada.
India’s pulses imports from Canada stood at USD 930.32 million in 2023-24 as against USD 370.11 million in 2022-23 and USD 411.24 million in 2021-22. The country’s total pulses imports were USD 3.77 billion in the last fiscal.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed - PTI)
