India-Canada | Improving ties while frictions exist

Trade negotiations are stuck on two crucial factors: India wants further flexibility on freer movement of professionals, Canada wants a specific cut on fruits and vegetable

The visit to India by Canadian Foreign Minister Melanie Joly follows a series of deep fissures in this vital bilateral. Almost everything that could go wrong went wrong prior to this visit in New Delhi’s eyes.

The comment by Canadian Prime Minister Justine Trudeau, at the height of the farmer’s protests in 2020 was shocking for New Delhi and viewed with great discomfort. It was seen as a colonial reflection on internal matters by an outside power, and put the India-Canada relationship in a state of distrust, if not outright hostility.

The really substantial crisis between the two states was the so-called referendum by Canadian Sikhs on the splittist platform of Khalistan. The perceived support and lack of action on Khalistan elements in Canada is a continuing red flag for India. India has seen the bombing of Air India aircraft and active support that fuelled terrorism on its soil originating from Canada. Those wounds are still raw, and given the resurgence of the Khalistan sentiment in Punjab, New Delhi is determined to quell the Canadian link.

Finally, the attack on a Hindu place of worship late last month, with a perception of lack of police action by Canada was yet another setback in the ties.

From all accounts, India has decided to let statesmanship take its course for now. Khalistan activism and religious freedom guarantees surprisingly did not find a mention in the MEA statement following Joly’s meeting with her Indian counterpart S Jaishankar.

Both countries must move swiftly to build on this new opportunity to steer the critical relationship in the direction of mutual trade enhancement, and geopolitical consequence.

The centrepiece of the new road map is the negotiations for Comprehensive Economic Partnership Agreement (CEPA). Given the size of the two economies, the integration between them has been very limited in scale. Indeed, for all the respective economic heft of the two countries, the trade is almost insignificant. Indian imports from Canada stand at $4.42 billion while exports to Canada are $2.21 billion. India’s export basket includes petroleum, precious jewellery, and pharmacy products, while India imports crude oil, precious stones, and coal. India is the value-added player here despite the current trade deficit by volume. The real gain for both sides in any trade agreement, going forward, would be to turbo charger the turnover, and the potential to double the trade within half a decade is a realistic target.

However, the trade negotiations, despite smiling faces and tweets by both sides during the minister’s visit, are stuck on two crucial factors. India is asking for further flexibility on freer movement of professionals, while Canada wants a specific cut on fruits and vegetable — a concession India cannot afford given the vulnerability of its farming sector.

Canada on its part, believes that it is already the most generous G20 country as far as immigration is concerned. In 2021, Canada accepted a record 400,000 immigrants, and India accounted for 128,000 of them. Given this, India’s push for more is unlikely to see a substantial increase. The best outcome could be an interim trade deal which looks at liberalising sectors with comparative advantages, and postpone a comprehensive agreement for a different round of talks.

The other significant development is Canada’s new Indo-Pacific strategy. Here, Ottawa has identified India as a key partner. India too is all ears. While both counties have China as their biggest trading partner, the geopolitical reality is decoupling from economic interdependence. Canada is to spend half a billion dollars a year to bolster its Indo-Pacific presence and within this context the two counties are likely to see greater engagement. This will translate to military co-operation though joint exercises and navies visiting each other’s ports. India considers this engagement and Canada’s explicit commitment to counter China articulated in its new stagey in November as a welcome platform for a broad based partnership.

A window of opportunity has opened for the two countries. Sore points remain and sorting then out will require just the kind of statesmanship which can go beyond the differences. The key here is investment in high level political capital which this visit and Joly’s follow on visit for the G20 foreign ministers’ summit will provide. The two democracies look set to make a concentrated effort to redefine this fragile friendship.

Ninad D Sheth is a senior journalist.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH)