India-Canada Relations

Free PDF's     27th July 2023        
Samadhaan

India-Canada Relations: A quick recap

  • India established diplomatic relations with Canada in 1947. 
  • In recent years, both countries have been working to enhance bilateral cooperation in a number of areas of mutual importance.

Significant collaborations

  • Trade: Canada is India’s second largest export destination and is the third largest source of imports for India. It is a major source of FDI for India, with total investments of nearly USD 5.5 billion.
  • Investment: India and Canada have strong bilateral relations which have been further strengthened by the India–Canada Foreign Investment Promotion and Protection Agreement (FIPA), signed in 2009.
  • Collaboration on STEM: India and Canada are also engaged in several joint development projects in the areas of science and technology, health, education, and climate change.
  • Energy: India and Canada have recently signed a Joint Declaration on Cooperation in the Field of Renewable Energy.
  • Security: India and Canada are also cooperating in the field of defence, with joint military exercises and training programs. 
  • Global institutional reforms: India and Canada are members of the Commonwealth of Nations and the G20, and cooperate on several international issues.

Recent souring of ties

Racist Policies
  • Canada’s perceived shift away from its traditional stance of neutrality has put at odds with India’s traditional non-alignment policy. 
  • Additionally, Canada’s criticism of India’s human rights record has been seen as offensive by many in India, leading to strained diplomatic relations. 
  • Additionally, Canada’s failure to exempt India from visa requirements has also been seen as a sign of disrespect.
Open support of Khalistan movement
  • Over 100,000 Canadians recently took part in voting for the Khalistan Referendum in Brampton, Ontario on 19 September which was organised by pro-Khalistani. 
  • Visuals on social media showed a huge number of men, women queueing up to vote in for Khalistan Referendum. 
  • Indian government had warned Canadian govt against the anti-India forces growing in the country. 
  • However, the Canadian government refused to stop them from expressing their views by holding the Khalistan Referendum and linking it with a “peaceful and democratic” process.
Other Impediments
  • Trade decline: India-Canada bilateral trade has been declining since 2013 and currently stands at around $7 billion. There is room to increase this trade and investments in both directions.
  • Illegal immigration: Canada has been increasingly concerned about illegal immigration from India, as well as the backlog in processing applications for legal immigration, both of which have caused tension between the two countries.
  • No security consensus: India and Canada have been working to enhance their defense and security ties, but the two countries have yet to sign a formal security agreement.
  • Under-utilized agriculture: Canada and India have been in negotiations to open up the agricultural sector to more trade, but disagreements over import restrictions and subsidies continue to be a major obstacle.
  • Human rights allegations on India: India and Canada have also clashed over human rights issues, with Canada criticizing India’s policies on religious minorities, freedom of speech, and other human rights issues.

Why is Canada suddenly recognizing India’s importance?

Indo-Pacific Strategy 
  • First is Canada’s Indo-Pacific Strategy that was issued last November. While it calls China “an increasingly disruptive global power,” it describes India as Canada’s “critical partner” for its regional and global objectives. This is music to Indian ears.
  • Indeed, this 23-page report mentions India 27 times, underlining their “shared tradition of democracy and pluralism, a common commitment to a rules-based international system.”
Merchandise trade
  • Canada and India have strong economic ties, with two-way merchandise trade between the two countries reaching $9.5 billion in 2019. 
  • Canada is also India's second-largest source of foreign direct investment, and Indian investments in Canada have grown significantly in recent years. 
Cultural ties
  • Canada and India also have strong people-to-people ties, with the Indian diaspora in Canada estimated to be more than one million strong.
  • Sikhs constitute a significant proportion of the Indian diaspora, they make up less than one percent (a little over 500,000) of Canada’s total population.
  • Cultural tourism is boosting between the two countries.
Newfound enthusiasm
  • This newfound enthusiasm was visible in the press release issued in Canberra on the eve of the Canadian foreign minister’s visit to India. 
  • India’s growing strategic, economic and demographic importance makes it a critical partner for Canada in the Indo-Pacific. 
  • In turn, Canada can be a reliable supplier of critical minerals, a stronger partner in the green transition, as well as a major investor.

Why is Canada important for India?

  • Destination for Indian students: Canada is one of the top sources for foreign students for Indian universities. India is the second largest source of immigrants to Canada.
  • 2nd largest trade partner: Canada is India's second-largest trading partner, and trade between the two countries has been growing steadily. 
  • Vibrant diaspora: Canada is home to a large and vibrant Indian diaspora, and the two countries enjoy strong people-to-people ties. 
  • Source of FDI: Canada is also an important source of foreign direct investment for India, and provides an important source of capital to Indian businesses. 
  • Liberal visas and citizenship: Canada is also an important source of skilled immigrants for India and is a popular destination for students and professionals from India. 
  • Trade partnership: Both nations look forward to their proposed Early Progress Trade Agreement (EPTA) before they finalize their CEPA.

Way forward 

  • Strengthening diplomatic ties: India and Canada should work towards strengthening their diplomatic ties, by engaging in more frequent diplomatic exchanges and dialogue. This could include increasing the number of high-level visits between both countries, and exploring opportunities for collaboration in areas such as trade, investment, and education.
  • Enhancing trade relations: India and Canada should focus on enhancing their bilateral trade relations, by exploring the potential for increased exports and investment. This could involve investing in joint initiatives that promote economic growth, as well as taking steps to reduce barriers to trade and investment.
  • Nurturing people-to-people ties: India and Canada should aim to encourage more people-to-people exchanges between the two countries. This could include increasing the number of students and scholars studying and teaching in each other’s countries, as well as promoting cultural exchanges and tourism.
  • Enhancing security cooperation: India and Canada should work together to enhance their security cooperation, by increasing information sharing and collaboration on countering terrorism, cyber-security, and other common security threats.
  • Technology collaboration: India and Canada should explore new areas of collaboration, such as in the fields of renewable energy, space exploration, and artificial intelligence. This could involve engaging in joint research and development initiatives, as well as exploring opportunities for joint ventures.

Conclusion

  • The India-Canada relationship has experienced both periods of collaboration and recent challenges. 
  • The historical ties between the two countries, including India's support for Canada's independence and Canada's recognition of India's struggle for freedom, have laid a foundation for bilateral cooperation.
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