Growing tensions between Canada and India over the alleged murder of a Khalistani terrorist might put a damper on a burgeoning economic relationship that goes far beyond mere commodities. Investments between the two nations had seen a significant rise, reaching C$36.2 billion ( ₹2.24 lakh crore) in 2022, marking a 37% increase in just four years, as per data from Statistics Canada.
Bloomberg quoted Vivek Dehejia, an Economics Professor at Ottawa’s Carleton University, as saying, “The financial connections are very strong in both directions.” He opined that the recent diplomatic fallout could have a “chilling effect” on investment flows.
India holds significant sway in Canada’s education sector, being the largest source of international students in Canadian universities and colleges. Meanwhile, three large Canadian pension funds—Canada Pension Plan Investment Board, along with funds for Quebec workers and Ontario teachers—have established offices in Indian cities like Mumbai and New Delhi. Collectively, these funds manage more than C$1.2 trillion ( ₹74 lakh crore).
Canada Pension Plan Investment Board, the largest pension manager in Canada, disclosed an investment of $21 billion (1.74 lakh crore) in India about a year ago. Major holdings include a 2.7% stake in Mumbai-based Kotak Mahindra Bank Ltd. and stakes in approximately 70 other Indian publicly-traded firms. The Caisse de Depot et Placement du Quebec and Ontario Teachers’ Pension Plan also have significant investments in India, amounting to C$8 billion ( ₹49,500 crore) and over C$3 billion ( ₹18,500 crore) respectively.
Talks for a potential trade deal between India and Canada, however, have been put on hold. Last year, Canada exported goods and services worth C$11.6 billion ( ₹71,700 crore) to India, which includes commodities like lentils, metallurgical coal and newsprint. India’s primary exports to Canada have been smartphones and railway cars.
Canadian Prime Minister Justin Trudeau sent ripples across diplomatic circles on September 18, accusing India of orchestrating the June murder of Hardeep Singh Nijjar in Vancouver.
India retorted by calling the allegations “absurd”, leading to the expulsion of diplomats from both nations. This episode laid bare a widening chasm in relations between the two countries, which had otherwise been flourishing on economic fronts.
(With Bloomberg inputs)