Think tank GTRI on Monday said diplomatic tensions between India and Canada have so far had no impact on bilateral goods trade between the two countries. However, the think tank has also said that as this dispute progresses, both countries will have to manage their actions carefully to avoid complete economic collapse. According to PTI news, bilateral goods trade between India and Canada is actually expected to increase from USD 8.3 billion in 2022-23 to USD 8.4 billion in 2023-24.
India imports from Canada
According to the report, India’s imports from Canada increased to USD 4.6 billion, while exports saw a slight decline to USD 3.8 billion. It said these figures show that, at least for now, economic relations remain stable, unaffected by the diplomatic storm brewing in the background. India has received foreign direct investment of US$4 billion from Canada between April 2000 and June 2024.
Diplomatic tension is not always destructive
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), said that at the moment, the trade resilience between India and Canada highlights an important lesson – diplomatic tensions, while damaging, are not always destructive to economic relations. “But as this dispute progresses, both countries will need to carefully manage their actions to avoid complete economic collapse.”
what is the controversy
India on Monday announced the recall of its high commissioner and other targeted diplomats and officials from Canada, after strongly rejecting Ottawa’s allegations linking the ambassador to the investigation into the killing of Sikh extremist Hardeep Singh Nijjar. This was a major deterioration in the already frosty relations between the two countries. India’s decision came soon after Canada’s charge d’affaires Stewart Wheelers was summoned to the Ministry of External Affairs (MEA) and he was clearly told that the baseless targeting of Indian High Commissioner Sanjay Verma and other diplomats and officials was completely unacceptable.
Srivastava said India’s decision to recall its high commissioner from Canada marks an escalation in diplomatic tensions that began in September 2023. Tension began when Canadian Prime Minister Justin Trudeau accused India of being involved in the killing of a Canadian citizen and Sikh separatist leader. The accusation led to the expulsion of diplomats and the halting of free trade agreement (FTA) negotiations.
