NEW DELHI - Trade talks between India and Canada have taken a hit as tension rises after Prime Minister Justin Trudeau said authorities were investigating “credible allegations” linking New Delhi’s agents to the murder of Sikh separatist leader Hardeep Singh Nijjar.
On Tuesday, New Delhi dismissed the allegations as " absurd" and asked Canada instead to crack down on anti-India elements operating in its territory.
HOW ARE TRADE TALKS AFFECTED?
Canada said this month it had paused talks on the proposed treaty with India, just three months after the two countries announced they intended to conclude a preliminary agreement this year.
Industry estimates show the Comprehensive Economic Partnership Agreement (CEPA) between Canada and India could boost two-way trade by up to USD 6.5 billion, yielding a GDP gain of between USD 3.8 and USD 5.9 billion for Canada by 2035.
WHAT ARE THE KEY ITEMS OF TRADE?
The steady growth has seen goods trade rising to USD 8 billion by 2022, with Indian exports to Canada touching USD 4 billion, and imports from Canada also worth USD 4 billion.
Canada's major imports include energy products such as coal, coke, and briquettes, besides fertilizers, while India exports consumer goods, garments, and engineering products such as auto parts, aircraft equipment, and electronic items.
Canada's top exports to India in 2022 were fossil fuels and related products worth nearly USD 1 billion, followed by fertilizers worth about USD 748 million and wood pulp and plant fibers worth about USD 384 million, according to Trading Economics/UN Comtrade data.
Canada's Canpotex is also among the largest suppliers of fertilizer ingredient potash. Three Indian companies that rely solely on importing fertilizers signed a memorandum of understanding with Canbotex in September 2022 to import about 1.5 million metric tons annually for three years.
Pharmaceutical products, worth about $418 million, made up the largest share of Indian exports last year, followed by iron and steel products with an estimated value of USD 328 million, and machinery, nuclear reactors, and boilers worth about USD 287 million.
The growing demand for lentils imported from India has benefited Canadian farmers, while Indian pharmaceutical and software companies have expanded their presence in the Canadian market.
WHAT IS THE INVESTMENT POSITION?
Canada ranks seventeenth among the largest foreign investors, pouring in more than USD 3.6 billion since 2000, while Canadian portfolio investors have invested billions of dollars in Indian stock and debt markets.
The Canadian Pension Fund had increased its investments in Indian markets to about USD 15 billion, in areas such as real estate, renewable energy, and the financial sector by the end of the last fiscal year in March 2023.
Other big pension funds with sizeable exposure to India include Caisse d'État et Position du Québec (CDPQ), which has C USD 8 billion (USD 6 billion) worth of investments as of December 31, 2022. and the Ontario Teachers' Pension Plan (OTPP), which had investments of more than USD 3 billion as of last year.
HOW HAVE CORPORATES BENEFITED?
More than 600 Canadian companies, including Bombardier and SNC Lavalin, have a strong presence in India, while more than 30 Indian companies, such as IT majors TCS, Infosys, and Wipro, have invested billions of dollars in Canada, creating thousands of jobs.
WHAT IS THE ROLE OF INDIAN STUDENTS IN CANADA?
Since 2018, India has been the largest source country for international students in Canada.
In 2022, their number rose 47 percent to nearly 320,000, accounting for about 40% of total overseas students, according to the Canadian Bureau for International Education, which also helps universities and colleges provide subsidized education for domestic students.
WHAT ARE THE IMPLICATIONS FOR SIKHS?
Many analysts say the worsening ties could affect the economic interests of thousands of Sikh families in the Sikh-majority Indian state of Punjab in the north, as they have relatives in Canada who remit millions of dollars back home.
The proportion of Canada's Sikh population has more than doubled in 20 years to 2.1 percent, according to the country's 2021 census, as large numbers of Sikhs immigrated from India in search of higher education and work.
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