Tensions Between Canada and India Jeopardize Booming Economic Ties

Tensions Between Canada and India Jeopardize Booming Economic Ties

VoM News Desk | September 20, 2023 | 08:10 AM IST | Breaking News, North America, World | Follow on Google News

Tensions Between Canada and India Jeopardize Booming Economic Ties

The Burgeoning Economic Partnership

Growing tensions stemming from the alleged murder of a Khalistani terrorist threaten to cast a shadow over the robust economic relationship between Canada and India. This partnership extends far beyond the exchange of commodities, as investments between the two nations have surged, reaching C$36.2 billion (₹2.24 lakh crore) in 2022, marking a remarkable 37% increase in just four years, according to Statistics Canada.

Financial Connections at Risk

Economics Professor Vivek Dehejia from Ottawa’s Carleton University emphasized the strength of the financial ties between the two nations. He stated that the recent diplomatic fallout could potentially have a “chilling effect” on investment flows.

India’s Influence in Canada’s Education Sector

India holds significant sway in Canada’s education sector, serving as the largest source of international students in Canadian universities and colleges. Simultaneously, three major Canadian pension funds—the Canada Pension Plan Investment Board, along with funds for Quebec workers and Ontario teachers—have established offices in Indian cities like Mumbai and New Delhi. Collectively, these funds manage over C$1.2 trillion (₹74 lakh crore). Notably, the Canada Pension Plan Investment Board, Canada’s largest pension manager, revealed an investment of $21 billion (1.74 lakh crore) in India approximately a year ago. Their substantial holdings include a 2.7% stake in Mumbai-based Kotak Mahindra Bank Ltd. and stakes in roughly 70 other publicly-traded Indian firms. Additionally, the Caisse de Depot et Placement du Quebec and the Ontario Teachers’ Pension Plan have significant investments in India, amounting to C$8 billion (₹49,500 crore) and over C$3 billion (₹18,500 crore), respectively.

Trade Deal Talks on Hold

Despite these substantial economic ties, talks for a potential trade deal between India and Canada have been temporarily halted. In the previous year, Canada exported goods and services valued at C$11.6 billion (₹71,700 crore) to India, including commodities such as lentils, metallurgical coal, and newsprint. India’s primary exports to Canada have included smartphones and railway cars.

The Accusation and Diplomatic Fallout

Canadian Prime Minister Justin Trudeau sparked controversy on September 18 by accusing India of orchestrating the June murder of Hardeep Singh Nijjar in Vancouver. India swiftly dismissed these allegations as “absurd,” resulting in the expulsion of diplomats from both nations. This episode has exposed a growing divide in the once-flourishing relationship between the two countries, particularly on the economic front.

VoM News Desk

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