Indian Prime Minister Narendra Modi.
Indian Prime Minister Narendra Modi. Credit: Indian government / Wikimedia Commons Credit: Indian government / Wikimedia Commons

India and Canada – two democracies and multicultural societies situated on opposite ends of the globe – are currently engaged in a diplomatic slugfest over the killing of a Khalistan separatist, Hardeep Singh Nijjar, on June 18, 2023. Nijjar is a Canadian citizen of Indian origin but India has him designated as a terrorist. 

Is it in the mutual interest  of Canada and India to have strained relations? I would say no.

In today’s deeply globalised world, the destinies of these two nations are intricately intertwined. India is headed to national general elections in the next few months, around April 2024. Next year Canada, too, will have its own general elections. It would behove leaders of both democracies to find a solution soon to their diplomatic spat.  

Canada should watch out for India’s election not only because it’s an emerging powerhouse, but also because there is a significantly large chunk of Canadians of Indian descent who have cultural and familial moorings in India. 

In India, between November and December 2023, state (provincial) level elections were held in five of the states. The ruling Bharatiya Janata Party (BJP), which is Prime Minister Narender Modi’s party, scored a resounding victory in Rajasthan, Madhya Pradesh and Chattisgarh, while the main opposition party Indian National Congress (INC) won in Telangana and a regional party was victorious in Mizoram. This is a significant feather in BJP’s cap ahead of India’s 2024 general election. 

BJP, under Prime Minister Modi has been ruling India since 2014. Modi is hoping to repeat his party’s victory for the third time later this year. BJP’s victory in the three important states of Rajasthan, Madhya Pradesh and Chattisgarh –  traditionally BJP strongholds – together account for 65 of 543 members in the Lok Sabha (Lower Parliament).  BJP’s victories in these states have propelled the party into a confident mood and set the tone for this year’s national election. 

BJP’s victory in the three northern states indicates that Prime Minister Modi’s popular image remains undented. More importantly, however, is that Prime Minister Modi ranks far ahead in the popularity chart compared to his opponents. The opposition – on the other hand remain a divided house and have not been able to throw up a single leader to stand tall against Prime Minister Modi. Also importantly, there is a plethora of opposition parties, often squabbling and – except for the INC – are regional and do not have a pan-India presence. The opposition can pose a formidable challenge to the BJP only if they are able to bury the hatchet and put up a joint front against them, which at present seems like a tall order.

However, opposition INC leader Rahul Gandhi’s popularity seems to be on the upswing judging by the large crowds turning up to his public rallies. The INC has shown some signs of regaining its old Midas’ touch in Southern India, after it snatched the southern Karnataka state from the BJP earlier in May 2023 and now the state of Telangana from another opposition party. But their loss in the three heartland states indicates that despite the seeming upsurge in Gandhi’s popularity, Indian voters at large may not be ready to repose faith in him or the party to secure them a big enough victory nationally. 

With a decisive political mandate in 2014, the BJP government ushered in political stability that is essential for growth and development and thus undertook a series of bold reforms. Goods & Services Act (GST), AADHAR,- national level ID card, digitization of the banking sector, building a large network of roads and highways as well as sale of the financially struggling, government owned AirIndia – which was a drag on the government’s limited resources. There has also been an emphasis on expanding and strengthening the country’s manufacturing sector (an important factor in transforming the economy from a developing to a developed one) are among the slew of initiatives by the government which have laid a strong foundation for future growth. 

While most advanced economies are facing an economic slowdown, high inflation, and ageing populations, the Indian economy with its GDP annual growth rate of around seven per cent, is the fastest growing economy in the world, moving from the 10th to fifth largest economy globally during the last decade. Earnest Young projects India’s GDP to cross USD $5 trillion from the current USD $3.39 trillion by 2028 to overtake both Japan and Germany. According to a recent government economic survey, the country’s economy is poised to touch the USD $7 trillion mark by 2030. Prime Minister Modi has given a vision of turning India into a developed economy by 2048.

In contrast, the Canadian USD $2.161 trillion (2022) economy post COVID is limping. 

It shrank 1.1 per cent in the third quarter of 2023, and the per capita GDP growth is feared to remain negative through 2024. In view of the continued geopolitical uncertainty and climate change challenges, high interest rates and inflation, the economic turn around is expected to be bumpy. 

Canada, however, enjoys strong economic ties with India. India was the ninth largest trading partner of Canada in 2022, with bilateral trade touching over $8 billion in 2023. Canada’s major exports to India are coal, fertilisers, pulses, wood pulp and plant fibres while Indian exports to Canada include pharmaceuticals, iron & steel products and telecom instruments.

Canadian companies are increasingly making direct investments in businesses in India, including investments by the Canadian Pension Plan Investment Board and asset management firm Brookfield. According to Invest India, Canadian companies made a cumulative investment of $3.3 billion between April 2000 and March 2023. 

To further boost their economic ties, since 2010 the two countries have been engaged in negotiations to firm up the India-Canada Comprehensive Economic Partnership Agreement (CEPA). However, due to the dark clouds cast by the Nijjar controversy, the Trudeau government has paused the negotiations for now. 

More than the economic ties, it is the presence of a large Indian diaspora in Canada, nearly two million Indians calling it home, that makes the ties between the two countries special. According to CIC nNews, in 2022, a record number of 551,405 international students from 184 countries came to Canada. Out of this, 226,450 were Indian students. Also in 2022, Indian students contributed $10.2 billion approximately to the Canadian economy through tuition fees and living expenses.

India looks set on an unprecedented growth trajectory in the coming decades. Along with its economy, its soft power is also growing. Canada should keep an eye out for any and all developments in this South Asian powerhouse, especially and particularly the upcoming national election. Equally, Canada holds significance for people in India due to the sheer amount of Indians that choose Canada as its new home country. It’s in both countries’ mutual political interest to collaborate and remain allies and partners in social and economic growth. 

Suresh Kalra

Suresh Kalra is a retired Indian diplomat. He served in several countries, including Singapore, Vietnam and South Africa, and different parts of India. Currently he is based in New Delhi.