We see trade with India growing two-fold in next 5 years: Ontario minister

In a Q&A, Victor Fedeli says several top Indian companies are continuing to build their presence in the Canadian province despite concerns of tighter global financial conditions

Referring to the current level of $400 million worth of exports from Ontario to India as a “blank canvas”, Victor Fedeli, Minister of Economic Development, Job Creation and Trade, Ontario, told Bhaskar Dutta that the trade could grow by two times over the next five years. Edited excerpts:

Where do things stand regarding an FTA between Canada and India? When is a deal likely to be announced?

That is a Federal Agreement, while we represent the provincial government. We encourage both (Indian and Canadian) governments to continue working aggressively towards a Free Trade Agreement. In Ontario and in Canada, we have FTAs with 50 countries.

We see a tremendous number of companies setting up in Ontario, just to access the markets that we can’t. It reminds us why it is so important to have a Free Trade Agreement, and how critical it is to encourage these companies to continue to move quickly.

Which are the key areas of investment in India that Canada is looking to boost? Could you provide a numerical estimate of the growth in trade that you expect over the next five years?

Let me put things in perspective before I throw some Indian numbers up. In Ontario, we have two-way trade with the US of $400 billion annually. So, it’s a billion dollars a day back and forth to the US. When I took (charge of) this ministry four years ago, I was reading my briefing note and saw that we do just under $4 billion between Ontario and India. But exports from Ontario to India are $400 million a year. We do that every morning with the US.

I actually thought it was a typographical error – that we do $400 million with India. So, I would say that we have a blank canvas here. That number can grow exponentially--$400 million a year with India, when we do $400 billion a day with the US? Both jurisdictions, I should say, were underperforming, grossly underperforming. That’s why we signed a renewed MoU with Telangana and with Maharashtra. In Telangana for instance, we added electric vehicles and artificial intelligence. So we renewed them and adjusted with some modern and current business growth areas.

So, when you ask me how much the trade would grow by, I would say 2x is not unreasonable when you’ve got such a small starting point.

Q: Which areas would drive this growth?

A: Certainly tech and advance manufacturing, which to me would include EVs, and would also include aerospace and life sciences. I think there’s a lot of upside both ways for life sciences. We’ve seen for instance, Sanofi from France building a billion dollar vaccine facility in Ontario for the flu shot. Roche Pharmaceuticals - $500 million facility in Ontario which is hiring 500 engineers. The Canadian Centre for regenerative medicine is a $552 million investment for genome research. So, we see a critical ecosystem in life sciences and we think there’s room in Ontario.

In India, on the other hand, the amount of money being spent on infrastructure is striking. The difference between my first trip here years ago and this last one is the striking difference in infrastructure. Hundreds of billions are being spent. So, I think when we see companies like Brookfield, Fairfax; our pension funds investing here, they came here because they view it as the right investment--a safe investment and a diversification of their portfolios.

Canadian pension funds are large investors in India. To what extent could the tighter global financial conditions caused by the aggressive US tightening cycle affect the trade with India?

I think that we continue to see important two-way trade. I’ll give you some examples at home. Fully understanding the market conditions, Tata Consultancy Services just announced 5,000 new hires in Canada, most of them in Ontario. They understand the current market scenario, they understand the interest rate scenario. Yet they’ve gone ahead and made the decision. There is long-term growth potential for them to continue hiring. We met with HCL a few days ago, where they talked about growing their office in Mississauga. They have 1,700 employees there today.

They understand the current market conditions. We were at a ribbon-cutting just a few days ago for LTTS. They’re fully aware of the turmoil in the world and the market conditions, yet they’ve opened a new facility with 100 employees in Markham.

Every country has told us the same things. In this tumultuous world that we find ourselves in today, post the pandemic and Russia's illegal war; in all of that turmoil, we see countries looking at Ontario as a sea of calm.

That’s partly why I mentioned life sciences. We’ve had $3 billion invested in life sciences in the past two years. About $16 billion has been announced for the auto sector, most of it in EVs in the past 22 months. So, lots of aggressive work happening in tech, life sciences and advance manufacturing.

At a time when major global technology companies are in the process of laying off a large number of employees, how does the environment for Indian IT companies in Canada look?

A few things have happened in Ontario. Number one, we’ve lowered the cost of doing business by $7 billion a year. That’s a very specific programme with a very specific target, so here’s what we did - we rolled back something called WSIB – it is the workplace safety insurance that companies are mandated to pay. It was overfunded. We reduced WSIB payments by 50 per cent annually. We lowered the provincial share of local property taxes by $450 million annually. We put an aggressive red-tape reduction programme in place.

Today, there are 500,000 more people working in the province of Ontario. It all came as a result of lowering the cost of doing business. There is sustainability in the tech sector – we graduate 65,000 STEM graduates every year.