THE CONTEXT: India and Canada have long-standing bilateral relations, with Canada home to a significant Sikh population. Canada is home to 5.26% of overseas Indians, including NRIs and PIOs. The relationship has been affected by issues such as Khalistani separatism and Canada’s stance on human rights in India.
THE ISSUES:
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- Khalistani Separatism: The Khalistan movement (advocating for a separate Sikh state) has been an issue between India and Canada. India has criticized Canada for allowing pro-Khalistani elements to operate from Canadian soil. The movement emerged in the 1970s and 1980s and has seen a resurgence among Sikh communities abroad, especially in Canada.
- Political and Human Rights Differences: India has accused Canada of providing a platform for extremists to intimidate Indian representatives and community leaders. Grievances include Canada’s criticism of India’s 1998 nuclear tests and disagreements over Kashmir.
- Diplomatic Actions: India ordered the expulsion of six Canadian diplomats, including the High Commissioner, and Canada expelled six Indian diplomats. India also suspended visa services in Canada, including e-visa services. Both countries issued travel advisories for their citizens.
THE IMPLICATIONS:
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- Economic Impact: In FY 2022-23, India’s exports to Canada were valued at $4,109.74 million, while imports stood at $4,051.29 million. India received an estimated $125 billion in remittances in 2023, with Canada contributing 0.6% of the total inward remittances. Canada accounts for just 0.56% of total FDI in India, with cumulative investments of USD 3.6 billion since April 2000. Canadian pension fund investments worth $75 billion in India might be impacted.
- Geopolitical Consequences: The dispute has strained India’s relationships with mutual allies, including the Five Eyes intelligence alliance and Quad partners. The UK and US have called for India to cooperate with Canada’s legal process. The crisis could potentially damage India’s G20 reputation.
- People-to-People Ties: The tensions may affect the Indian diaspora in Canada, including Sikhs, Hindus, and immigrants from various parts of India. Cultural and social connections between the two nations could be strained.
PRESENT STATUS OF ECONOMIC RELATIONS OF INDIA AND CANADA:
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- Foreign Direct Investment (FDI): Canada accounts for just 0.56% of the total FDI in India. From April 2000 to June 2023, the total FDI equity inflow into India was $645.39 billion, with only $3.64 billion coming from Canada.
Trade Relations:
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- Bilateral Trade Volume: In FY 2022-23, India’s trade with Canada was valued at $8.16 billion, representing just 0.70% of India’s total trade of $1,165 billion.
- Trade Balance: India’s trade balance is favorable. In 2022-23, India’s exports to Canada were $4.11 billion, while imports from Canada stood at $4.05 billion.
- Indian Diaspora: Canada is home to 5.26% of overseas Indians, with a population of approximately 1.69 million Indians, including NRIs and PIOs.
- Education: In 2022, about 13.83% (183,310) of Indian students abroad studied in Canada.
PRESENT STATUS OF CULTURAL RELATIONS OF INDIA AND CANADA:
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- Overseas Indians in Canada: Canada is home to 5.26% of overseas Indians, with approximately 1,689,055 individuals. This includes 178,410 Non-Resident Indians (NRIs) and 1,510,645 Persons of Indian Origin (PIOs).
- Indian Students in Canada: In 2022, about 13.83% (183,310) of the estimated 1.3 million Indian students studying abroad were in Canada. This highlights the strong educational linkages between the two countries.
- Canadian Tourists in India: In 2021, Canada was the fourth largest source of tourists to India, accounting for 5.3% (80,437) of Foreign Tourist Arrivals (FTAs). However, post-pandemic arrivals from Canada have significantly decreased.
THE WAY FORWARD:
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- High-Level Dialogue: Establish a regular high-level dialogue mechanism between the foreign ministers of both countries to address contentious issues directly. There should be increased engagement in multilateral forums like the G20 and Commonwealth to find common ground on global issues.
- Track II Diplomacy: Encourage think tanks and academic institutions from both countries to engage in Track II diplomacy to build mutual understanding.
- Revive Trade Negotiations: Resume negotiations for the Comprehensive Economic Partnership Agreement (CEPA) that were paused due to tensions. This could potentially increase bilateral trade beyond the current $8,161.02 million (FY 2022-23). Strengthening cooperation in emerging technologies and innovation, where both countries have complementary strengths.
- Tourism Boost: Develop targeted tourism campaigns to restore Canadian tourist arrivals to pre-pandemic levels (151,859 in 2019) and beyond, capitalizing on the fact that 72.6% of Canadian FTAs were members of the Indian diaspora.
- Joint Counter-Terrorism Task Force: Establish a bilateral task force to address mutual security concerns, including issues related to extremism and separatism.
- Collaborate on Global Challenges: To rebuild trust, cooperation on pressing global issues of mutual interest, such as clean energy, climate change, and cybersecurity, is essential. Climate change and pandemic preparedness allow India and Canada to rebuild trust and demonstrate shared values.
THE CONCLUSION:
India and Canada must engage in high-level diplomatic dialogues to address their differences and find common ground. Both nations should focus on their shared interests in global challenges and work towards a political understanding that addresses diaspora concerns while mitigating separatist influences.
UPSC PAST YEAR QUESTION:
Q. ‘Indian diaspora has a decisive role to play in the politics and economy of America and European Countries’. Comment with examples. 2020
MAINS PRACTICE QUESTION:
Q. Analyze the causes of the current India-Canada diplomatic row and discuss its potential implications on economic, geopolitical, and diaspora relations.
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