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India – Canada Clash endanger Billions of Investment 

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This diplomatic spat between Canada and India over the death of Nijjar threatens to halt the two nations’ burgeoning economic links, which are considerably more extensive than the flow of products shipping across the Pacific.

According to experts, India-Canada ties, which have historically been driven by trade and the presence of a large Indian diaspora in Canada, have gradually deteriorated in recent years due to assertions from India that Canada promoted compassion towards the Khalistani movement, and counter-claims from Canada accusing Indian officials of interfering in its domestic politics.

Where it all started:

On June 18th , 2023, Nijjar, a 45 year old Khalistani activist was shot dead outside a Gurudwara in Vancouver, Canada. At the time of his murder, he was apparently organizing an unauthorized referendum in India for an independent Sikh republic.

According to Canadian Prime Minister, Justin Trudeau, India was involved in the assassination of Nijjar in June. Trudeau on Monday said in the parliament that any involvement of foreign government in the killing of a Canadian citizen was ” an unacceptable violation of our sovereignty.” The Indian government called the charges “absurd” and urged Canada to tighten down anti-India organizations operating on its soil.

“Such unsubstantiated allegations seek to divert attention away from Khalistani terrorists and extremists who have found refuge in Canada and continue to threaten India’s sovereignty and territorial integrity,” the ministry said in a statement.

Trudeau stated that he discussed Nijjar’s murder with Prime Minister Narendra Modi during the Group of 20 (G20) Summit in New Delhi . He stated that he informed Modi that any complicity by the Indian government would be unacceptable and that he requested help in the probe.

In a comparing and contrasting action, India has expelled a senior Canadian ambassador, only hours after Ottawa ousted a top Indian official.

The government  had summoned Cameron MacKay, Canada’s high commissioner in New Delhi, to inform him of the decision and has asked him to leave the country within five days.

Impact on Canadian economy 

The incident reveals a developing dispute between two nations that had been getting closer on monetary and economic aspects. According to Statistics Canada, investment between Canada and India increased 37% in four years to C$36.2 billion in 2022. Until recently, both nations had been negotiating a trade agreement. Those have now been halted.

During July, India’s major goods exports to Canada were cellphones and railway carriages. The country is ranked 12th among the top exporters to Canada.

India is a tiny consumer of Canadian goods, but it is a major player in a college education industry, since it is by far the biggest supplier of foreign students entering Canadian colleges and universities. If the relations between the two nations continue to get tense, there might be a huge impact on the education sector in Canada.

Impact on Indian Economy 

Canadian pension funds have invested billions of dollars in Indian businesses and projects, which include industries, banks and corporates. While the impact on commerce is likely to be minor, the disagreement may freeze investment flows between the two nations.

According to Statistics Canada, Canada shipped C$11.6 billion in services and goods to India last year, less than one-third the amount of its exports to China. Lentils, metallurgical coal, and newsprint exports dominated Canadian products exports to India in July. 

According to its website, CPPIB, Canada’s largest pension manager, had invested $21 billion in India roughly a year ago. One significant investment is a 2.7% interest in Mumbai-based Kotak Mahindra Bank Ltd., which is worth 96 billion rupees ($1.2 billion). In accordance with a fund disclosure statement, it is one of around 70 publicly traded Indian firms in which the fund has a holding.

Impact on Corporate World

According to Invest India, about 600 Canadian firms have a presence in India, and over 1,000 Canadian companies are actively looking for business in the Indian market. 

According to experts, because India and Canada are not competing on identical items but rather trade in complementary products, these events may have little impact on trade ties. But surely when it comes to investments in companies from both the countries, it is likely to have a much greater impact. Future investments might be jeopardized if the conflict between the two nations intensifies.

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