Trade talks between India and Canada have hit a roadblock as tensions escalate following Prime Minister Justin Trudeau’s statement about investigating “credible allegations” linking Indian agents to the murder of Sikh separatist leader – Hardeep Singh Nijjar. This development has significant implications for both nations with potential consequences for their trade relationship.

Hardeep Singh Nijjar's Murder Will Affect Canada-India Trade Relations, Will It Be Impacting GDP too?

1. The Pause in Trade Talks

Canada recently announced the suspension of talks on the proposed treaty with India, just three months after both countries expressed their intent to finalize an initial pact this year.

2. The Comprehensive Economic Partnership Agreement (CEPA)

The Comprehensive Economic Partnership Agreement (CEPA) between Canada and India carries the potential to enhance two way trade by up to $6.5 billion. This could result in a substantial GDP gain ranging from $3.8 billion to $5.9 billion for Canada by 2035.

3. Key Items of Trade

Goods trade between the two nations has been on a steady rise, reaching $8 billion in 2022. Indian exports to Canada amount to $4 billion while imports from Canada also stand at $4 billion. Major imports from Canada include energy products like coal, coke and briquettes as well as fertilizers. In contrast, India exports consumer goods, garments, engineering products (including auto parts and aircraft equipment) and electronic items.

4. Trade Highlights

Canada’s primary exports to India in 2022 consisted of fossil fuels and related products, fertilizers and wood pulp and plant fibers. On the other hand, India’s exports to Canada included pharmaceutical products, iron and steel products, and machinery, nuclear reactors, and boilers. Notably, Canadian lentil exports have benefited from India’s growing demand while Indian pharmaceutical and software companies have expanded their presence in the Canadian market.

5. Investment Position

Canada ranks as India’s 17th largest foreign investor having invested over $3.6 billion since 2000. Canadian portfolio investors have also poured billions into Indian stock and debt markets. The Canadian Pension Plan (CPP) has significantly increased its investments in India reaching approximately $15 billion with interests in real estate, renewables and the financial sector as of March 2023.

Several prominent pension funds including Caisse de dépôt et placement du Québec (CDPQ) with investments valued at C$8 billion ($6 billion) as of December 31, 2022 and Ontario Teachers’ Pension Plan (OTPP) with investments exceeding $3 billion from the previous year which have substantial exposure to India.

6. Cooperates Benefited Between Chaos

Over 600 Canadian companies, such as Bombardier and SNC Lavalin have established strong presences in India. More than 30 Indian companies including tech giant leaders like TCS, Infosys and Wipro have  invested billions of dollars in Canada, generating thousands of jobs.

9. Indian Students in Canada

Indian students have played a pivotal role in Canada’s education landscape. Since 2018, India has been the largest source country for international students in Canada and in 2022, their numbers surged by 47% to nearly 3,20,000, constituting approximately 40% of all overseas students. This influx also contributes to subsidized education opportunities for domestic students in Canadian universities and colleges.

10. Implications for Sikhs

The deteriorating relations between India and Canada could have economic repercussions for many Sikh families residing in India’s Sikh-majority state of Punjab in the north. These families often have relatives in Canada who remit substantial sums of money back home. The Sikh population in Canada has more than doubled over two decades to reach 2.1%, according to the country’s 2021 census, primarily due to Sikhs migrating from India in pursuit of higher education and employment opportunities.

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