Canada India Diplomatic Row: Impact On Bilateral Trade In Goods

The diplomatic tensions between India and Canada have so far not impacted the bilateral trade in goods between the two countries. This was stated by the think tank GTRI who effectively and positively said it on Monday. However, along with it, it also added that as this dispute drags on further.

This is because both nations will need to carefully manage their actions to avoid a full-blown economic fallout. The bilateral merchandise trade between India and Canada had grown slightly from $8.3 billion in 2022-23 to $8.4 billion in 2023-24. In it, India’s imports from Canada increased to $4.6 billion. On the other hand, exports saw a marginal dip, which were falling to $3.8 billion.

“These figures suggest that, at least for now, economic ties remain stable, unaffected by the diplomatic storm brewing in the background,” it said.

“For now, the resilience of trade between India and Canada highlights an important lesson — diplomatic tensions, while damaging, do not always spell disaster for economic ties. But as this dispute drags on, both nations will need to carefully manage their actions to avoid a full-blown economic fallout,” Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said.

Canada Row: What Did India Announce?

With regard to the Canada row, India announced on Monday that it would be withdrawing its high commissioner and other “targeted diplomats and officials” from Canada. This act would be a mark of their strong dismissal of Ottawa’s allegations linking the envoy to an investigation. This investigation was linked 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).

It was told bluntly that the baseless “targeting” of Indian High Commissioner Sanjay Verma and other diplomats and officials was “completely unacceptable”. Along with that, 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 this had let to the pause of Free Trade Agreement (FTA) talks.

More On Canada India Diplomatic Row…

“Despite these significant political frictions, the on-ground impact on trade between the two countries has been minimal. This is largely because trade happens at the private-sector level, and neither India nor Canada has introduced regulations that restrict the flow of goods or services,” he said.

In other words, while the diplomatic relations between the two countries have soured, the businesses on both sides have continued to engage, insulated from the political noise, he added.

Plus, India has received $4 billion foreign direct investments from Canada. This was during April 2000 and June 2024.

Canadian and Indian Trade Statistics So Far

Below given is the Canada and India trade statistics so far. Feel free to check it out:

Category	Value (CAD)	Value (USD)

Total Bilateral Trade

8.3 billion

6.5 billion

Exports from India to Canada

4.2 billion

3.2 billion

Imports from Canada to India

4.1 billion

3.1 billion

Major Exports from India

– Textiles and Apparel

1.0 billion

0.76 billion

– Pharmaceuticals

0.9 billion

0.68 billion

– Machinery

0.6 billion

0.46 billion

– Software and IT Services

0.5 billion

0.38 billion

– Gems and Jewelry

0.4 billion

0.30 billion

Major Imports from Canada

– Potash

1.3 billion

1.0 billion

– Lentils

0.8 billion

0.6 billion

– Wood Products

0.6 billion

0.46 billion

– Aerospace Products

0.5 billion

0.38 billion

– Beef and Other Agricultural Goods

0.4 billion

0.30 billion

Investment from India to Canada

1.8 billion

1.4 billion

Investment from Canada to India

1.5 billion

1.1 billion

Thus, this is the record of statistics that Canada and India have done so far. It will still be going on regardless of whatever is occuring. However, one could only pray for the diplomatic row to end in good terms. This on a wide scale will be good for both the countries including that of Canada and India. Plus, both countries have a lot to offer on a good scale. This is totally good as it will bring in a stream of large benefits for a lot of peoplein both the Canadian and Indian economy.