(Toronto) Escalating tensions between Canada and India are jeopardizing the delicate trade and investment relationship that the two countries have worked to advance for years, business leaders said Friday.
Prime Minister Justin Trudeau accused India on Monday of being involved in the murder of a man wanted by that country’s authorities. Hardeep Singh Nijjar, a Sikh activist and Canadian citizen, was shot dead in June outside a Sikh temple in a Vancouver suburb.
The situation worsened in the following days, with both sides engaging in an exchange of diplomatic retaliation by expelling each other’s representatives. India has also temporarily suspended all visa services for Canadian citizens.
Canada-India Business Council President and CEO Victor Thomas said Canada is striving to expand its trade relations with India, the world’s most populous country, with the fastest growing economy among the world’s major economies.
Trade negotiations are now affected due to the conflict between the two countries, with Canada’s trade minister postponing a planned October mission to India.
Businesses like stability and predictability, Mr. Thomas recalled. The current situation is anything but that.
“In the middle of all this […], we’re trying to see, you know, where things land and how we can actually navigate the future. »
Just a few weeks ago, Thomas said Canadian business leaders had high hopes that Ottawa and India could sign an early-stage trade deal, widely seen as an important step toward a peace deal. broader global economic partnership.
Negotiations for a deal covering specific sectors began in 2010, were suspended for five years and finally resumed in 2022, but Canada suspended the process again in early September. The news sparked surprise and concern in the business community, with Saskatchewan Premier Scott Moe’s government saying the provinces were being kept in the dark.
Saskatchewan accounts for a large portion of Canadian exports to India. Canada sent 5.3 billion worth of goods to this country in 2022, or 0.7% of overall exports, according to Statistics Canada. Imports from India amounted to 8.3 billion, or about 1.1% of total global imports.
Some of the major Canadian exports include ores and non-metallic minerals, particularly potash, as well as pulses such as lentils.
Unknown long-term impacts
Mr Thomas argued there was great untapped trade potential between the two countries, but much of the progress now appeared to be wasted. The businessman was in India this week, with a delegation, when Mr. Trudeau made his allegations. The talks were then canceled, he said.
Although the long-term impacts of this situation are still unknown, for some in the business world, things are changing by the hour, noted Jonathon Azzopardi, CEO and president of Ontario manufacturing company Laval Tool & Mold, and director of the Canadian Mold Makers Association.
His company was due to meet with the Indian government this week about its participation in projects in the coming year.
“Even though they spoke kindly about it, they made it very clear that this situation between Canada and India had to be resolved […] before they can go any further,” Mr. Azzopardi explained.
Business relations between the two countries are not equal given the size of India, Mr. Azzopardi stressed. “Canada needs India more than India needs Canada. »
And at present, the tense relations between the two countries are on difficult ground, he said.
“These are the kinds of things that can break up relationships for good.” And India is already a very complicated country, with which it is difficult to establish trade relations,” he noted.
Automobile Parts Manufacturers Association President Flavio Volpe said he was more concerned about the long-term consequences of the conflict for his industry than any immediate impact, but he also hoped the problem could be resolved.
There isn’t a lot of trade between India and Canada when it comes to the automotive sector, but there is a lot of Canadian investment in Indian manufacturing, he explained. Existing agreements will continue despite tensions, he added.
However, in the longer term, the feeling of security is important for businesses, he said. Investors will want to know if Mr. Trudeau’s allegations are true, to ensure they are investing in a country that respects the rule of law.
So depending on how this plays out, long-term investment progress could stall, Volpe warned.
The suspension of visa services in India could also have major consequences for the business world, as trade and investment often require travel, Thomas observed.
“Everything happens in real time. And we are all trying to understand that,” he said.