Billions of rupees of trade at stake due to India-Canda tension, what will happen to lakhs of students?
In this article, we will discuss the tension between India and Canada and what its financial implications could be. On October 14, India said that it has recalled Indian High Commissioner Sanjay Verma and other diplomats from Canada. However, another version of this is that Canada has expelled six Indian diplomats from its country and India has also expelled six Canadian diplomats from India. Canadian Prime Minister Justin Trudeau held a press conference and alleged that Indian agents are behind the violence and murders in the country, but what will be the effect of increasing tension between the two countries on the economic relations between the two countries.
We will tell you about this in detail later but let us understand what is the whole matter of this deteriorating relationship and what is the reason. Let us go back 1 year to last year when Canadian citizen Hardeep Singh Nijjar was killed, who is a citizen for Canada but for India he is a designated terrorist who supports Khalistan. After the murder of Hardeep Singh Nijjar, Canadian Prime Minister Justin Trudeau pointed fingers at India while India outrightly rejected the allegations of the Canadian government. But after this incident both the countries asked each other's diplomats to leave the country. Due to this, a lot of controversy had increased between the two countries and there was a lot of rhetoric too. Canada used to say that the Indian government had got Nijjar killed and India kept saying that if you think India got it done then give proof. The debate remained completely entangled in this matter.
Now let us know what impact this dispute will have on the economy
In the last few years, the economic relations between the two countries have been somewhat strong. Despite the political tensions, there has been no significant change in trade between the two countries. It is being said that the level at which things are progressing, it seems that now this conflict can spoil the business relations between the two countries.
Now let us find out how much trade there is between them
Now there is a trade of roughly 70000 crores between the two countries. According to the Global Trade Research Initiative (GTRI), the bilateral merchandise trade between India and Canada is $ 8.3 billion in the financial year 2022-23. If we convert this rupee to today's date, it amounts to about 9753 crores. Whereas in the financial year 202-24, the trade between the two countries had increased further. During this period, there was a trade of 8.4 billion dollars, about 70592 crores in rupees between the two countries, both the countries do such a big trade between themselves. Now during this period, India's imports from Canada increased to about 38659 crores, while exports registered a slight decline and remained at 935 crores.
Now let us also know what things are traded between the two countries
India buys pulses on a large scale from Canada. Apart from this, it also buys news print and newsprint paper and wood pulp, mica, iron scrap, copper minerals and industrial chemicals etc. Talking about other goods, India has also been buying fertilizer and plant fiber from Canada. Canadian company Canpotex is the biggest supplier of potash used in making fertilizer. This company supplies what is used in fertilizer. India buys about 15 lakh tonnes of potash from Canada every year while Canada has been buying gems, jewellery, diamonds, medicines, food items, ready made clothes, light engineering goods, iron and steel products from India. Apart from this, India has also sold machinery, nuclear reactors and boilers to Canada.
Now let's talk about investing
Canadian portfolio investors have invested billions of dollars in the Indian stock market and debt market. By the end of the last financial year i.e. March 2023, the Canadian Pension Fund CPP has invested about Rs 6 lakh crore in the Indian markets in sectors like real estate, renewable energy and financial sector. According to the data of National Securities Depository Limited, Canada is the ninth largest foreign portfolio investor in India by September 2024. Canadian investors have invested about ₹ 2 lakh crore in the Indian stock market and about 36000 crore in debt. Similarly, Canada's investment in India increased by 32% year-on-year in September 2024 and has reached Rs 2.34 lakh crore. Entry of Canadian companies in India has increased rapidly. More Canadian companies are coming to India. More than 600 Canadian companies are doing their business in India. Many companies of India have also invested billions of dollars in Canada. Companies here are also going there. Due to which thousands of jobs have been created there. These companies have invested more than Rs 40000 crore in Canada. More than 17000 people have got employment there.
Apart from trade and investment, a large number of Indian students go to Canada for their higher education. For this reason, Canada is considered one of the most preferred institutions for higher education by Indian students. According to the National Foundation for American Policy, about 40% of all international students in Canada are Indian students. This shows that a large number of Indian students are going there to study. The Canada Bureau of International Education says that in 2022, their number had increased by 47% to about three lakh twenty thousand, which is about 40% of the total foreign students. In the year 2023, the highest number of 4.27 lakh students from India went to Canada to study. Apart from this, a large number of Indians also do jobs and business in Canada. Especially thousands of people from Punjab have settled in Canada and still keep going there or their relatives are also in Canada. Indians not only work in Canada but they also have a good dominance in the business community there. With around 18 lakh expatriate Indians and 1 lakh non-resident Indians, Canada is one of the largest hubs of Indian diaspora abroad, according to External Affairs Ministry data.
This figure is more than 3% of Canada's total population. Although experts say that it is a bit early to say what will happen next, but the study of Global Trend and Research Initiative (GTRI) shows that if the dispute continues for a long time, then both the countries will definitely be affected economically. GTRI founder Ajay Srivastava said in a statement that even though no effect is visible between the two countries right now, but if this dispute continues for a long time, it can affect both the countries. Hopefully, trade and business will continue to run smoothly and peacefully.
Anil Paal
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