The lingering tensions between India and Canada will take a heavy toll on the growing economic ties between the two countries. India is the fifth largest economy in the world while Canada stands at ninth. The two countries are on an even keel when it comes to the size of their bilateral business at USD8 billion.
Thirty Indian software companies do business in Canada and their combined business works out to Rs40,500 crore. These companies have engaged a combined 17,000 local resources. If the current standoff continues, they are likely to suffer.
Indian companies have played a big role in augmenting the per capita income of local people. In case they shut shop, thousands of Canadian staff in payroll of these firms will be jobless.
According to a CII report, 85 per cent of Indian companies had planned to increase their investments in Canada. But the current downslide in the bilateral relations has forced them to keep their plans on hold.
India companies have made decent investments in Canada. Besides software firms, various other firms have invested in non-IT sectors such as banking, natural resources and forest produce.
In 2022, India was the 10th largest trading partner of Canada. In 2022-23, its total exports to Canada were USD422 cr while in the same period, its total imports added up to USD 405 dollar. From USD 700 crore in 2021-22, the bilateral business between the two countries has gone up to USD816 crore – a growth of over 15 per cent.
The Canada Pension Plan Investment Board (CPPI) has invested in Kotak Mahindra Bank, online food delivery platform Zomato, online payment platform Paytm and leading IT firm Wipro. The total investments of CPPI in these Indian firms are over Rs1 lakh crore.
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Canada’s imports from India include jewellery, gems, pharmaceutical produce, readymade garments, organic chemicals, light engineering and steel items while India imports dal, newsprint, potash, iron scraps, minerals and industrial chemicals from Canada. India is a large market for Canada, especially its dal.
The political tussle between the two countries will affect Canada more. India is currently fifth largest economy in the world while Canada is pegged at ninth slot (USD 2.2 lakh crore). Canada depends heavily on the US and the latter accounts for over 75 per cent of Canada’s total exports.
India’s large domestic markets and favourable demographics can afford India more manoeuvrability in terms switching trade deals from Canada while the latter does not have too many options. Both the countries must shun one-upmanship and find diplomatic ways to end tensions.
Also Read: National News