By Annunthra Rangan
In an indication of tentative diplomatic thaw, India’s Exterior Affairs Minister Subramanyam Jaishankar and Canada’s newly appointed International Minister Anita Anand held a constructive dialogue on the way forward for bilateral relations. Jaishankar said that the 2 had “mentioned the prospects of India-Canada ties” and prolonged his greatest needs for Anand’s tenure. Anand, whose household traces its roots to India, described the alternate as productive and expressed her dedication to “strengthening Canada-India ties, deepening our financial cooperation, and advancing shared priorities.” This interplay marks an essential step towards restoring diplomatic engagement following months of strained relations between the 2 nations.
In recent times, one of many key sources of rigidity between India and Canada has been the Khalistan motion and its supporters inside Canadian borders. Advocating for an unbiased Sikh homeland in Punjab, the motion is considered by New Delhi as a big nationwide safety concern. Diplomatic relations between the 2 nations deteriorated sharply in September 2023 after the killing of Hardeep Singh Nijjar, a Canadian citizen and distinguished Khalistani activist in Surrey, British Columbia. Canadian Prime Minister Justin Trudeau said there have been “credible allegations” suggesting involvement of Indian brokers within the incident. India strongly refuted the declare, calling it baseless and countering that Canada had grow to be a hub for extremist parts threatening Indian sovereignty.
Tensions had been additional heightened in November 2023 when a U.S. federal court docket unsealed an indictment linking an Indian official to an tried assassination plot focusing on a Khalistani determine on American soil. In October 2024, the U.S. Division of Justice formally charged the person, Vikash Yadav, and steered attainable ties between this case and Nijjar’s homicide in Canada. Notably, New Delhi responded with a extra measured method to the U.S. allegations, initiating a high-level inside investigation. In distinction, its stance towards Ottawa remained combative, deepening the diplomatic rift.
In the identical month, Canadian authorities together with the Royal Canadian Mounted Police accused Indian diplomats of connections to severe felony actions inside India, akin to homicide, extortion, and intimidation. This led to a brand new spherical of reciprocal expulsions of diplomats, driving bilateral relations to their lowest level in current historical past. Round this time, Canada additionally started going through claims of overseas electoral interference attributed to India.
On January 28, 2025, the ultimate report from the Public Inquiry into International Interference in Federal Electoral Processes and Democratic Establishments, led by Commissioner Marie-Josée Hogue, recognized India because the second most lively overseas actor in Canadian elections, following China. The report highlighted intelligence indicating that proxy brokers might have covertly supplied illicit monetary assist to sure Canadian politicians, with the target of selling pro-India candidates or influencing officeholders. India’s Ministry of Exterior Affairs categorically denied these assertions, rejecting what it known as unfounded insinuations.
Canada’s 2022 Indo-Pacific Technique acknowledged India as a important associate, citing its growing strategic, financial, and demographic relevance within the area. Regardless of this recognition, the financial relationship between the 2 nations stays underdeveloped. In 2022, India ranked as Canada’s tenth largest buying and selling associate, but the proportion of Canadian items in India’s complete imports has persistently remained low, hovering between 0.5 and 1 per cent. Equally, India’s exports to Canada have constituted simply 1 to 1.5 per cent of its complete international exports.
In 2023, complete bilateral merchandise commerce between the 2 nations reached CAD 12.5 billion. Of this, Canadian exports to India accounted for CAD 5 billion, whereas imports from India stood at CAD 7.5 billion, leading to a Canadian commerce deficit of CAD 2.5 billion.
Nonetheless, the companies sector introduced a contrasting image. Canada posted a companies commerce surplus of CAD 10.8 billion in 2023 a pointy 90% rise from CAD 5.7 billion the earlier yr. This was primarily attributable to CAD 14.06 billion in companies exports, together with journey, enterprise, and transportation companies, in comparison with CAD 3.22 billion in companies imports.
Negotiations for a Complete Financial Partnership Settlement (CEPA) started in 2010. In March 2022, the 2 sides pursued a extra focused Early Progress Commerce Settlement (EPTA), specializing in particular sectors. Nonetheless, the diplomatic disaster that unfolded in September 2023 led Ottawa to droop talks simply earlier than Prime Minister Justin Trudeau’s allegations relating to Indian involvement within the killing of Hardeep Singh Nijjar.
Canada’s merchandise exports to India in 2023 had been closely concentrated. The highest 10 export classes made up 85.3% of complete exports. Key sectors included:
Mineral fuels and oils: 21.67%
Edible greens, roots, and tubers: 15.98%
Fertilizers: 11.51%
India’s exports to Canada had been extra various, together with electrical equipment, prescribed drugs, mechanical home equipment, and different industrial items.
Worldwide schooling stays a cornerstone of financial ties. In 2022, worldwide college students contributed roughly CAD 31 billion to Canada’s GDP, with Indian nationals forming the most important group — representing 41% of scholar permits issued that yr, and 37% by November 2023. College students from Punjab alone added practically USD 8 billion to the Canadian financial system in 2023. Nonetheless, this sector got here below strain in 2024 attributable to immigration coverage adjustments and the diplomatic fallout.
As of September 2023, Canada ranked because the Seventeenth-largest overseas investor in India, with cumulative FDI of USD 4.05 billion – about 0.57% of India’s complete FDI inflows. Notably, Canadian institutional investments (primarily by pension and mutual funds) surged from CAD 5 billion in 2014 to over CAD 55 billion in 2023. These investments span infrastructure, logistics, clear vitality, banking, actual property, and extra.
Key Canadian buyers in India embrace:
Ontario Academics’ Pension Plan BoardCanada Pension Plan Funding Board (CPPIB)Ivanhoe CambridgeBrookfield Asset ManagementFairfax India Holdings Company
From 2019 to 2023, India obtained 25% of Canadian pension fund flows, a big improve from 10% throughout 2003–2018. Between 2013 and 2023, about 57% of those investments focused actual property, monetary companies, and transportation, totaling over CAD 9.4 billion. Regardless of political tensions, Canadian investments continued to develop, with notable exercise in This autumn 2023, together with a serious funding in logistics firm Xpressbees.
India’s FDI into Canada reached CAD 9.8 billion in 2023. An estimated 75–80 Indian firms function in Canada, with 30 corporations collectively investing over CAD 6.6 billion and producing practically 17,000 jobs, in response to a 2023 report by the Confederation of Indian Business and the Canada India Enterprise Council.
Main Indian firms in Canada embrace:
Tata Consultancy ServicesInfosysWIPROState Financial institution of IndiaICICI BankAditya Birla GroupTata SteelJubilant Life Sciences
Canadian Companies in India
Over 1,000 Canadian corporations are lively in India throughout sectors akin to aviation, prescribed drugs, engineering, IT, and consulting. Main Canadian enterprises embrace: BombardierSNC LavalinCAE ElectronicsMcCain FoodsSun Life Monetary
Excessive-potential sectors for Canadian funding in India:Clear energyInfrastructureCritical mineralsAdvanced manufacturingAgriculture (fertilizers and pulses)
Excessive-potential sectors for Indian funding in Canada:
Data technologyPharmaceuticalsNatural resourcesFinancial companies
India additionally gives Canada avenues for financial diversification, provide chain resilience, and collaboration in areas like renewable vitality and rising applied sciences.
Considerably affected sectors
Tourism: The suspension of Indian visas for Canadian residents in September 2023 led to a decline in Canadian vacationer arrivals and financial losses in India’s tourism sector.
International Direct Funding: Canadian FDI into India fell from CAD 5.3 billion in 2022 to CAD 3.9 billion in 2023. Nonetheless, this mirrored a broader 47% drop in India’s general FDI influx, making it tough to isolate the influence of bilateral tensions.
Commerce: Opposite to expectations, bilateral commerce remained steady. Annual items commerce elevated from CAD 12.6 billion in 2023 to CAD 13.3 billion in 2024. Month-to-month commerce volumes in September and October 2024 even barely surpassed pre-standoff figures from early 2023.
Canada continues to be a number one provider of lentils to India, sustaining strong export ranges even amid diplomatic friction. Canadian lentil exporters have known as for a revival of commerce talks to solidify long-term prospects.
Canada formally concluded its bilateral growth help program to India in 2006, after offering help totaling CAD 2.39 billion over a span of 55 years. This determination aligned with India’s broader coverage shift away from accepting direct overseas help. Since then, Canadian growth assist has continued by way of alternate channels, together with partnerships with Indian and Canadian non-governmental organizations, in addition to by way of multilateral establishments such because the World Financial institution and the Asian Improvement Financial institution.
Present Canadian growth funding in India is essentially directed towards initiatives selling sustainable financial progress, combating infectious illnesses, enhancing diet, and advancing renewable vitality entry in underserved areas.
Moreover, the Worldwide Improvement Analysis Centre (IDRC), Canada’s principal growth analysis establishment maintains its Asia regional workplace in India. The IDRC continues to collaborate with Indian educational and analysis establishments on points akin to local weather resilience, inclusive financial growth, and gender fairness.
Throughout his tenure, Justin Trudeau appeared to have used overseas coverage as a method to deflect consideration from his home challenges. By portraying India as an adversary, Trudeau successfully shifted public discourse away from urgent inside points. Nonetheless, this method mirrored an absence of diplomatic maturity and risked inflicting long-term harm on a strategic bilateral relationship. As a substitute of choosing measured, quiet diplomacy, Trudeau selected to escalate tensions with India on the worldwide stage, additional straining ties at a important juncture.
One of the contentious and unresolved elements of Trudeau’s tenure was his dealing with of allegations surrounding Chinese language interference in Canada’s electoral processes. China emerged as the first overseas actor accused of undermining Canadian sovereignty by way of covert operations, political affect, and financial leverage. Over a number of years, intelligence stories pointed to Beijing’s involvement in efforts to sway the outcomes of the 2019 and 2021 federal elections, together with monetary assist for sympathetic candidates and makes an attempt to advertise insurance policies favorable to Chinese language pursuits.
In response, the Trudeau authorities established the International Interference Fee to analyze and handle exterior threats to Canada’s democratic establishments. Whereas the fee initially targeting interference from China and Russia, current diplomatic rifts with India raised considerations that New Delhi may additionally fall below its scrutiny. Regardless of home strain to undertake a more durable stance on Beijing, Trudeau’s actions such because the delayed ban on Huawei’s participation in Canada’s 5G community had been extensively criticized as reactive and inadequate.
Trudeau’s restricted response to Chinese language affect left a vacuum in Canadian overseas coverage and prompted efforts to redirect consideration towards different geopolitical actors, akin to India. Nonetheless, this method risked alienating an important democratic associate at a time when each nations shared frequent considerations about China’s increasing footprint.
Given the dimensions and class of Chinese language affect operations, it’s crucial for India and Canada to maneuver previous bilateral frictions and work collaboratively to safeguard their democratic programs. As two main democracies within the Indo-Pacific and past, each nations have a strategic curiosity in guaranteeing that overseas interference significantly from authoritarian regimes doesn’t undermine their political establishments or public belief. Constructing a framework for joint intelligence-sharing, cyber protection, and coverage coordination may assist fortify their societies in opposition to exterior threats and restore confidence in bilateral engagement.
—The author is a Senior Analysis Officer at Chennai Centre for China Research. Her analysis pursuits represent China-WANA (West Asia and North Africa) relations and human rights
