The
diplomatic tensions between India and Canada have so far not impacted the
bilateral trade in goods between the two countries, according to think tank
GTRI. However, it added that as this dispute drags on, both nations will need
to carefully manage their actions to avoid a full-blown economic fallout.
The bilateral merchandise
trade between India and Canada actually grew slightly from $8.3 billion in
2022-23 to $8.4 billion in 2023-24.
India’s
imports from Canada increased to $4.6 billion, while exports saw a marginal
dip, falling to $3.8 billion.
India on Monday 14 Oct
announced withdrawing its high commissioner and other “targeted diplomats and
officials” from Canada after strongly dismissing Ottawa’s allegations linking
the envoy to an investigation into the killing of Sikh extremist Hardeep Singh
Nijjar, in a major downturn in already frosty ties between the two nations.
India’s
decision came shortly after the Canadian Charge d’Affaires Stewart Wheelers was
summoned to the Ministry of External Affairs (MEA) and was told bluntly that
the baseless “targeting” of Indian High Commissioner Sanjay Verma and other
diplomats and officials was “completely unacceptable”.
Srivastava
said that India’s decision to withdraw its High Commissioner from Canada marks
an escalation in the diplomatic tensions that began in September 2023 The strain started when Canadian Prime
Minister Justin Trudeau accused India of involvement in the killing of a
Canadian citizen and Sikh separatist leader.
This
allegation led to a back-and-forth expulsion of diplomats and paused Free Trade
Agreement (FTA) talks. In other words,
while diplomatic relations may have soured, businesses on both sides have
continued to engage, insulated from the political noise.
India
has received $4 billion foreign direct investments from Canada during April
2000 and June 2024.