Comprehensive Economic Partnership Agreement Faces Uncertainty Amid Diplomatic Friction Between India and Canada
Trade discussions between India and Canada have encountered
setbacks due to escalating tensions following Prime Minister Justin Trudeau's
statement regarding the investigation of "credible allegations"
linking New Delhi's agents to the assassination of Sikh separatist leader
Hardeep Singh Nijjar. India has strongly rejected these allegations as
"unfounded" and has called upon Canada to address anti-India elements
operating within its borders.
HOW TRADE TALKS ARE
Canada recently announced the suspension of negotiations on
the proposed treaty with India, a mere three months after both countries
expressed their intent to finalize an initial agreement within the year.
Experts estimate that the Comprehensive Economic Partnership Agreement (CEPA)
between Canada and India has the potential to increase bilateral trade by up to
$6.5 billion, resulting in a GDP gain ranging from $3.8 billion to $5.9 billion
for Canada by 2035.
KEY ASPECTS OF TRADE
The trade in goods has witnessed steady growth, with the total
trade volume reaching $8 billion in 2022. India's exports to Canada amounted to
$4 billion, while imports from Canada were also valued at $4 billion. Major
imports from Canada include energy commodities like coal, coke, and briquettes,
as well as fertilizers. Conversely, India exports consumer goods, garments, and
engineering products such as auto components, aircraft equipment, and
In 2022, Canada's primary exports to India consisted of
fossil fuels and related products worth nearly $1 billion, followed by
fertilizers valued at almost $748 million, and wood pulp and plant fibers
amounting to approximately $384 million, according to Trading Economics/UN
Comtrade data. Additionally, Canada's Canpotex is a significant supplier of the
fertilizer ingredient potash, and three Indian companies, relying entirely on
fertilizer imports, signed a Memorandum of Understanding (MoU) with Canpotex in
September 2022 to import approximately 1.5 million metric tonnes annually for
The bulk of Indian exports in the same year comprised
pharmaceutical products, totaling about $418 million, followed by iron and
steel products valued at around $328 million, and machinery, nuclear reactors,
and boilers amounting to roughly $287 million. Canada's lentil exports have
benefited from India's growing demand, and Indian pharmaceutical and software
firms have expanded their presence in the Canadian market.
Canada ranks as India's 17th largest foreign investor, having
invested over $3.6 billion since 2000. Canadian portfolio investors have also
allocated substantial sums in Indian stock and debt markets. Notably, the
Canadian Pension Plan (CPP) increased its investments in Indian markets to
approximately $15 billion, primarily in real estate, renewables, and the
financial sector by the end of the last fiscal year in March 2023. Other
prominent pension funds with significant exposure to India include Caisse de
dépôt et placement du Québec (CDPQ), with investments worth C$8 billion ($6
billion) as of December 31, 2022, and the Ontario Teachers' Pension Plan
(OTPP), which had investments exceeding $3 billion as of the previous year.
More than 600 Canadian companies, such as Bombardier and SNC
Lavalin, maintain a strong presence in India. Simultaneously, over 30 Indian
companies, including IT giants TCS, Infosys, and Wipro, have invested billions
of dollars in Canada, generating thousands of job opportunities.
ROLE OF INDIAN STUDENTS
Since 2018, India has held the position of being the largest
source country for international students in Canada. In 2022, their numbers
increased by 47% to nearly 320,000, constituting approximately 40% of the total
overseas student population, according to the Canadian Bureau of International
Education. This influx of Indian students also enables universities and
colleges in Canada to provide subsidized education to domestic students.
IMPLICATIONS FOR SIKHS
Many analysts point out that the deteriorating bilateral
relations could impact the economic interests of numerous Sikh families in
India's Sikh-majority state of Punjab, as they often have relatives in Canada
who remit substantial sums of money back home. Canada's Sikh population has
more than doubled in the past two decades, reaching 2.1% of the population
according to the country's 2021 census. This increase is attributed to a
significant number of Sikhs migrating from India in pursuit of higher education
and employment opportunities.