India-Canada trade thrives despite political tensions

Despite strained relations between India and Canada, their trade ties have remained stable and even improved slightly in 2024. According to recent data, bilateral trade in goods reached CA$ 11.36 billion (approximately ₹69,368 crore) in 2024, up from CA$ 10.74 billion (₹65,723 crore) in 2023. This shows a notable growth in trade despite the ongoing political crisis.

The trade volume has grown significantly since 2020, rising over 64%. In 2020, it stood at CA$ 7.63 billion (around ₹42,139 crore), reflecting a clear upward trend. A trade dashboard from India’s Consulate in Toronto also reported a moderate increase in trade from January to November 2024.

The main exports from India to Canada include medicaments, jewelry, smartphones, seafood, and diamonds. On the other hand, India imports peas, lentils, bituminous coal, potassium chloride, and newsprint from Canada.

Though the trade figures remain modest, they are noteworthy given the diplomatic tensions that erupted in 2023. In September, Canadian Prime Minister Justin Trudeau’s statement about the possible involvement of Indian agents in the killing of pro-Khalistan leader Hardeep Singh Nijjar led to a sharp decline in relations. By October 2023, tensions escalated when India withdrew six diplomats after Canada accused them of links to criminal activities. India dismissed these claims and expelled six Canadian diplomats in response.

Despite the diplomatic rift, both governments have made efforts to preserve the economic relationship. Experts believe there is a mutual desire to keep trade unaffected by political tensions. Vina Nadjibulla, vice-president of research and strategy at the Asia-Pacific Foundation of Canada, noted that both sides have worked to ring-fence the economic ties from the ongoing crisis.

Before the diplomatic issues surfaced, India and Canada were close to finalizing an Early Progress Trade Agreement (EPTA) to deepen their economic ties. However, the agreement negotiations were paused in August 2023 due to the diplomatic fallout over Nijjar’s death.

Nadjibulla also pointed out that the shifting global economic landscape, influenced by US President Donald Trump’s tariff threats, has made governments rethink their economic strategies. Despite the tensions at the national level, sub-national engagements continue. Delegations from the provinces of Alberta and Saskatchewan have visited India this month, underscoring the ongoing interest in fostering closer ties.

Overall, despite the political challenges, India and Canada have continued to nurture their economic partnership, and both sides see strong potential in this relationship. The complementary nature of their economies offers a promising outlook for future collaboration.