Datanomics: India, Canada look to reset frosty economic relations

The two countries unveiled a roadmap to bring their relations on track by focusing on trade, investment and people-to-people ties

Prime Minister Narendra Modi and External Affairs Minister S Jaishankar recently held meetings with Canadian Foreign Minister Anita Anand, which could have the potential to reset the India-Canada ties that have been faltering for two years now. The two countries unveiled a road map to bring relations back on track through a focus on trade, investment and people-to-people ties. A diplomatic spat emerged between the two after the then-Canadian PM Justin Trudeau accused India of killing a Khalistani separatist, Hardeep Singh Nijjar, in September 2023.  

 

India-Canada trade: Untapped potential

 

India’s merchandise exports to Canada declined 6.5 per cent in 2023-24 (FY24) in US dollars  — the year allegations were made over Nijjar’s killing — and rose in FY25. India’s imports from Canada rose in FY24 but dipped in FY25. The total trade between the two remained below 1 per cent of India’s total merchandise trade, reflecting untapped potential. 

 

Indian FDI in Canada on a decline

 

The total book value of India’s direct investment into Canada declined by 25.62 per cent in Canadian dollars from 2022 to 2024. On the other hand, Canada’s investment into India dropped 42 per cent over the same period.  

 

Permits issued to Indians fell in 2024

 

In order to keep the immigration system ‘sustainable’, Canada has put a cap on international student study permits. Both study and work permits issued to Indians have seen a dip in 2024 vis-à-vis the 2023 numbers.