Escalating India-Canada Tensions Threaten Bilateral Trade and Sikh Communities
In a development that threatens to cast a shadow over the burgeoning trade ties between India and Canada, allegations of Indian government involvement in the assassination of Khalistani terrorist Hardeep Nijjar have led to a sudden pause in talks on a proposed treaty between the two nations. As a result, experts are now concerned that these rising tensions could have far-reaching implications for trade and the well-being of Sikh communities in both countries.
Just three months ago, both India and Canada had expressed their intent to finalize an initial pact this year. Industry insiders had hailed the Comprehensive Economic Partnership Agreement (CEPA) between the two nations as a potential game-changer, with estimates suggesting it could boost two-way trade by as much as $6.5 billion. Furthermore, this trade boost was projected to yield a significant GDP gain for Canada, ranging from $3.8 billion to $5.9 billion by 2035.
Over recent years, trade relations between India and Canada have seen a steady rise, with goods trade reaching $8 billion in 2022. India has played a pivotal role in this trade equation, exporting a wide array of products, including consumer goods, garments, auto parts, aircraft equipment, and electronic items. Conversely, Canada has been a key supplier to India, providing essential imports like energy products such as coal, coke, and briquettes, as well as fertilizers.
Notably, fossil fuels and related products from Canada constituted the largest chunk of Canada’s exports to India in 2022, accounting for nearly $1 billion in trade. Fertilizers followed closely behind, with a value of nearly $748 million, while wood pulp and plant fibers amounted to about $384 million, according to Trading Economics/UN Comtrade data.
The sudden halt in treaty talks has raised concerns within business circles and policy makers on both sides. The pause in negotiations underscores the fragility of international relations and the potential for economic consequences when diplomatic ties are strained.
One significant aspect to consider is the substantial population of Indian students in Canada. Since 2018, India has held the title of being the largest source country for international students in Canada. In 2022, this number surged by an impressive 47%, reaching nearly 320,000 students. This influx accounted for approximately 40% of all overseas students in Canada. This demographic not only contributes to the cultural diversity of Canadian campuses but also plays a vital role in subsidizing education costs for domestic students.
Moreover, as the tensions between India and Canada continue to escalate, there is a growing concern about the implications for Sikh communities in both countries. In India’s northern state of Punjab, which has a Sikh majority, many families have relatives in Canada. These transnational connections have resulted in millions of dollars being remitted back to India by Sikh Canadians. Therefore, the deterioration in relations between the two nations could have a significant economic impact on these families and their communities.
Canada’s Sikh population has seen remarkable growth over the past two decades, more than doubling to 2.1% of the country’s total population, according to the 2021 census. This increase can be attributed in large part to the migration of Sikhs from India in search of higher education and employment opportunities in Canada.
While these allegations and tensions have caused a pause in trade talks, it’s important to note that economic ties are often intricately linked to diplomatic relations. Any prolonged interruption in negotiations or deterioration in diplomatic relations could have a ripple effect on the economic interests of both nations.
As the world watches the evolving situation between India and Canada, there is hope that diplomatic efforts will be made to ease tensions and resume dialogue. The consequences of a prolonged stalemate could impact not only the economic prosperity of both nations but also the well-being of the Sikh communities that span across continents. The future of India-Canada relations remains uncertain, and only time will tell whether these nations can navigate the complexities of geopolitics to safeguard their economic interests and maintain the bonds that connect their diverse populations.
