The ongoing diplomatic tensions between India and Canada have not yet disrupted the bilateral trade of goods. The Global Trade Research Initiative (GTRI) noted that while the political landscape remains fraught, trade figures show resilience, with bilateral merchandise trade increasing slightly from USD 8.3 billion in 2022-23 to USD 8.4 billion in 2023-24, according to a recent analysis reported by the news agency PTI, based on GTRI report.
India’s imports from Canada rose to USD 4.6 billion, while exports experienced a minor decline to USD 3.8 billion. These trends indicate that, for the time being, economic relations are stable despite the backdrop of diplomatic challenges. GTRI Founder Ajay Srivastava emphasized that this situation illustrates an important point: although diplomatic rifts can be detrimental, they do not always result in severe economic repercussions. He cautioned, however, that as the dispute continues, both nations must manage their actions carefully to prevent a significant economic fallout.
Tensions escalated recently when India announced the withdrawal of its high commissioner and several other diplomats from Canada in response to allegations from Ottawa linking Indian officials to the assassination of Sikh extremist Hardeep Singh Nijjar. This diplomatic spat follows Canadian Prime Minister Justin Trudeau’s claims of India’s involvement in Nijjar’s death, leading to reciprocal expulsions of diplomats and a halt in discussions regarding a Free Trade Agreement (FTA).
Despite these significant political tensions, Srivastava pointed out that the impact on trade has been limited. He attributed this stability to the nature of trade, which primarily occurs at the private sector level without any governmental restrictions on goods or services.
In terms of investment, India has attracted USD 4 billion in foreign direct investments from Canada between April 2000 and June 2024.
