Effect of Strained Diplomatic Relations Between India & Canada on Trade Ties? Read Experts Opine
Experts Assert Economic Interests Will Prevail, Insulating Trade Relations from Diplomatic Friction
NEW-DELHI: Amid recent strains in diplomatic relations between India and Canada, experts believe that trade and investment ties between the two nations are likely to remain resilient, primarily driven by economic interests that transcend diplomatic fluctuations. Both countries engage in trade involving different products, reducing direct competition and potentially preserving trade growth.
Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), emphasized that the nature of their trade relations, with distinct product offerings, mitigates the impact of day-to-day political events. He stated, "Hence, trade relations will continue to grow and will not be affected by day-to-day events."
Political incidents have led to a stall in negotiations regarding a free trade agreement between India and Canada. Prime Minister Narendra Modi conveyed India's concerns to Canadian Prime Minister Justin Trudeau regarding anti-India activities and promotion of separatism by extremist elements in Canada. This exchange of views took place on September 10.
Srivastava highlighted that relations between the people of both countries, as well as their trade and economic relations, are unlikely to suffer due to recent events. He pointed out that Canada and India trade in distinct categories of goods, minimizing direct competition.
Notably, Bilateral trade between the two countries has witnessed significant growth in recent years, reaching US$ 8.16 billion in the fiscal year 2022-23. India's exports to Canada, amounting to US$ 4.1 billion, include medicines, gems, jewelry, textiles, and machinery. Conversely, Canada's exports to India, totaling US$ 4.06 billion, consist of pulses, timber, lumber, paper, and mining products.
In terms of investment, experts anticipate that Canadian pension funds will continue to invest in India, considering India's sizable market and favorable returns on investment.
Sharad Kumar Saraf, Chairman of Technocraft Industries, a Mumbai-based exporter, acknowledged the current state of India-Canada relations as a cause for concern. However, he emphasized that bilateral trade operates on commercial considerations and isn't likely to be significantly impacted by temporary diplomatic turmoil. Saraf drew a parallel to India's strained relations with China, wherein trade relations have continued to flourish.