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Canada-India trade relationship still a work in progress

Canada-India trade relationship still a work in progress

Although it has an immense potential, the trade relationship between Canada and India remains in its infancy.

A high-profile visit by Canadian Prime Minister Justin Trudeau to India this week garnered more headlines for a series of PR blunders than any substantial discussion on the increasingly important trade relationship between the two countries.

First, there were accusations that the Trudeau family had been “snubbed” by Indian PM Narendra Modi after he failed to meet them at the airport. Trudeau’s “first official visit to India has not been the headline-grabbing love fest he must be accustomed to on his overseas trips,” reported journalist Ayeshea Perera in The Hindustan Times.

Controversy also emerged in the fact that a Sikh extremist and Canadian national named Jaspal Atwal, convicted of the attempted murder of an Indian politician, was on the guest list at a shindig at the Canadian High Commissioner’s residence in New Dehli — an invitation that was later withdrawn amid an official apology.

“Obviously we take this situation extremely seriously. The individual in question never should have received an invitation,” Trudeau told reporters on Thursday.

Yet the bad press obscures an increasingly vital relationship between the two countries. India recently took over China as the world’s fastest-growing major economy, and Canada has plenty of areas in which to take advantage as it seeks to diversify its trade relationships around the globe.

Yet a proposed Canada-India Comprehensive Economic Partnership Agreement, for which talks began in 2010, has hit stumbling blocks. Prime Minister Modi has proven to be a protectionist on a number of economic sectors valuable to Canada, notably agricultural imports such as lentils and chickpeas, staples of the Indian diet. Last year, Modi’s government issued a 50 percent tax on pea imports to offset a price drop that was hurting local farmers, among other tariffs. Canadian farmers have said they will cut their lentil acreage by about 30 percent this year, while pea plants look set to drop to a seven-year low, according to Bloomberg News.

A far more productive element of the Canada-India relationship, according to analysts, lies in India’s burgeoning tech industry.

India and Canada are well positioned to help each other’s tech industries take on the established giants of the U.S. and Canada. Several Canadian tech companies are moving to India to find the software engineers that are in short supply back home. Meanwhile, Indian firms, such as One97 Communications Ltd., are setting up shop in Toronto as a staging ground to take on the North American market, according to Canadian business journalist Kevin Carmichael.

“We need to build a brain chain,” Kasi Rao, president of the Canada-Indian Business Council, recently told The Financial Post.

Yet, for now, the relationship remains in its infancy. “Canada does more trade with seven other countries than it does with India, which, when you consider the U.S. accounts for three-quarters of our international sales, means we effectively do nothing of significance with an economy that is growing around 7 percent per year,” Carmichael wrote.

Furthermore, India sits in the bottom half of the World Bank’s list of countries for ease of doing business. It can take 1,445 days to enforce a contract, which is longer than 15 years ago, the World Bank says.

Nevertheless, there is immense potential in the future of the relationship. According to the IMF, India’s GDP will grow by $2 billion per year over the next five years and its population expand from 1.3 billion to 1.4 billion, meaning Canada should invest time and resources in deepening the partnership, especially in innovation and technology.