The strain in Canada-India relations could impact the market, potentially affecting pulses

The strain in Canada-India relations could impact the market, potentially affecting pulses

According to the ‘From India to Canada – Economic Impact and Engagement’ report released in May 2023, Indian companies play a significant role in Canada’s economy. The report reveals that Indian companies have invested a substantial sum of INR 40,446 crores in Canada. These Indian companies have also generated more than 17,000 jobs in Canada.

Tensions rise between India and Canada over the Khalistan issue

In the wake of the G20 Summit, Canada’s Prime Minister Justin Trudeau announced the suspension of a trade mission with India upon his return to Canada. Without citing a specific reason, he decided to halt this trade pact. If Canada continues on this trajectory, it could have repercussions on the business ties between both nations. Canada is the seventh-largest investor in India, with investments totaling INR 1.77 lakh crore in Indian markets as of August 2023, including INR 1.5 lakh crore in equity markets.

Growing strains in relations between India and Canada

The escalating tensions between the two nations have raised concerns in the business world. The heavy investments due to deteriorating diplomatic relations could witness an impact on Canada’s economy. Over 30 Indian companies have invested in Canada, and if diplomatic relations worsen, these businesses could be affected. This may also lead to a jobs crisis in Canada as Indian companies have created significant employment opportunities there.

Commercial ties between India and Canada

According to the ‘From India to Canada – Economic Impact and Engagement’ report released in May 2023, Indian companies play a crucial role in Canada’s economy. CII had released this report, stating that Indian companies have invested CAD 40.45 billion in Canada. Indian companies have created over 17,000 jobs in Canada. These companies have plans to increase investments and hiring in the next five years. However, if tensions between the two countries persist, these companies might reconsider their investments, potentially affecting Canada’s economy.

What India imports from Canada

India imports various goods from Canada, including lentils, newsprint, coal, fertilizers, pulses, wood pulp, and aluminum. If the dispute escalates, India may explore alternative sources for these commodities, reducing its dependence on Canada.

What Canada imports from India

Canada imports a range of products from India, including diamonds, precious stones, pharmaceuticals, ready-made garments, unstitched fabrics, organic chemicals, engineering goods, iron, and steel. Over 600 Canadian companies operate in India, and strained relations could affect business and employment prospects.

Affecting agriculture and horticulture trade

India imports agricultural and horticultural products from Canada, and many of the Indian-origin Punjabi community members are involved in this business in Canada. If diplomatic relations deteriorate further, it could affect those engaged in agriculture and horticulture in Canada.

Trade Relations Between India and Canada

So far, India-Canada trade relations have been healthy. India ranks as Canada’s 10th largest trading partner. The import and export volumes between the two nations are nearly balanced. During the fiscal year 2023, India exported CAD 4.11 billion (approximately INR 34,000 crore) worth of goods to Canada, while its imports from Canada stood at CAD 4.17 billion (approximately INR 35,000 crore). For the financial year 2021-22, both countries conducted trade amounting to CAD 7 billion, and in the financial year 2022-23, the trade increased to CAD 8.16 billion. However, Canada’s dependence on trade with India is more significant.

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