(Commonwealth_India) Despite the ongoing crisis in relations between India and Canada, trade between the two nations has remained notably stable, with figures even showing a slight improvement in 2024 compared to the previous year. Bilateral trade in goods reached CA$ 11.36 billion (approximately ₹69,368 crore) in 2024, a modest increase from CA$ 10.74 billion (around ₹65,723 crore) in 2023. This growth is particularly striking when compared to the situation just a few years ago—trade volume surged by over 64% from 2020, when it stood at CA$ 7.63 billion (approximately ₹42,139 crore), based on data from Statistics Canada.
India’s consulate in Toronto also reported a moderate increase in trade figures from January to November 2024. While the data is not as comprehensive as Statistics Canada’s, the general trend of a positive growth trajectory in trade between the two countries remains clear. This growth, however, comes against the backdrop of significant political tensions, which have tested the diplomatic relations between India and Canada.
The deterioration in ties began after Canadian Prime Minister Justin Trudeau’s remarks in the House of Commons on September 18, 2023. Trudeau stated that there were “credible allegations” linking Indian agents to the killing of Hardeep Singh Nijjar, a pro-Khalistan figure, in Surrey, British Columbia, three months prior. This statement ignited a diplomatic firestorm, leading to further strain between the two nations. In October 2023, the situation escalated when India withdrew six diplomats and officials from Canada, responding to Ottawa’s accusations of their involvement in criminal activities there. In retaliation, India expelled six Canadian diplomats.
Despite these tensions, the economic relationship between India and Canada has managed to avoid a major breakdown. Both governments have made deliberate efforts to shield the trade partnership from the fallout of the political crisis. According to Vina Nadjibulla, Vice President of Research and Strategy at the Asia-Pacific Foundation of Canada, both countries are keen to protect the economic ties and have actively worked to separate them from diplomatic issues. “There is a desire on both sides to ring-fence it from the political and diplomatic crisis,” Nadjibulla explained.
Before the crisis erupted, the two countries were on the cusp of significantly strengthening their economic relationship. They were in the final stages of negotiations for an Early Progress Trade Agreement (EPTA), a deal that would have paved the way for deeper economic cooperation. However, Canada paused these discussions in August 2023 due to the deterioration in diplomatic relations. Later reports linked the suspension directly to the fallout from the Nijjar killing.
Interestingly, the ongoing trade stability and efforts to protect economic relations come amidst broader global shifts. Nadjibulla pointed out that the trade environment is being reshaped by US President Donald Trump’s tariff threats, which have caused many governments, including those in Canada and India, to reassess their economic strategies. With the global trade landscape in flux, both nations are likely keen to maintain stable bilateral trade ties, even in the face of significant diplomatic challenges.
At the sub-national level, trade and diplomatic relations with India have continued through provincial engagements. This month alone, delegations from the Canadian provinces of Alberta and Saskatchewan visited India, highlighting the continued interest and potential for economic collaboration at the regional level. These sub-national exchanges reflect the complementary nature of the economies of Canada and India, with both countries continuing to see the economic relationship as one of significant potential.
In terms of the specifics of trade, India’s exports to Canada have been diverse, with the top five categories being medicaments, articles of jewelry, smartphones, seafood, and diamonds. On the other hand, India imports a variety of goods from Canada, with the major categories including peas, bituminous coal, lentils, potassium chloride, and newsprint.
While the overall trade figures still fall short of what many would consider ideal, they are nonetheless noteworthy given the tense political backdrop. The economic relationship between India and Canada remains resilient, and the desire from both sides to preserve and expand these ties will likely play a key role in shaping future interactions, despite the current challenges in the diplomatic sphere.
