November 30, 2022

FTA BETWEEN INDIA AND CANADA CAN BE A GAME CHANGER 

n recent weeks, news related to Indo-Canadian relations has been less than positive. India has historically been concerned with Khalistani elements and continues to feel strongly about the issue. Recently, India went so far as to issue a travel advisory for our students in Canada. At the same time, the Canadian side has been concerned with security issues in India and followed their own advisory for Canadian citizens here. Both countries may have legitimate reasons, and both have been very sensitive to them. However, such issues inhibit us from realizing the full potential of this relationship. The Indo-Canadian partnership has not reached where it should be because periphery issues tend to engulf the rest of the relationship.

India has been forging greater and closer trade ties in the form of FTAs with many nations in recent years. At the same time, the Indo-Canada FTA is long overdue. A potential Indo-Canada trading relationship can be a major stimulus to development on both sides and it must not be allowed to be derailed by other issues. We’re both liberal democracies and part of many of the same international institutions—from the G20 to the Commonwealth and the UN among others. We have ahead of us a unique opportunity for mutual growth and the instrument for that is the long-awaited FTA between the two countries.

India is one of the fastest-growing economies in the world and is projected to be the world’s third-largest economy by 2050. The growing population, rising per capita income levels, expanding manufacturing, as well as the technology and services sectors, make it a tremendous market of opportunity for Canadian companies. Yet even though trade between the two countries has increased over the years, it is not where it can or should be. Prime Minister Modi suggested a willingness to bridge this gap by pointing out that India is focusing on the manufacturing sector and Canada has raw materials. He added, “we have the requirement. So, we can work together and move forward”.

The spurt and energy needed to reach our potential trading partners can be provided by an FTA. A closer trading relationship will also undoubtedly lead to non-issues and irritants between the two countries becoming irrelevant over time. Thus, the FTA serves not just as a trading partnership, but also as a bedrock for a deeper geopolitical relationship.

Additionally, as Canada looks to diversify and expand its supply chains beyond China, India is one of the obvious destinations to seek. With the Canada-China relationship deteriorating each day and new divisions arising around the world from the Ukraine conflict, India is in a strong position to reap the effects of diversifying supply chains, especially from Canada. With our increasing digitization, connectivity of both transport and communication, the introduction of 5G, and rise in rankings in ease of doing business, India serves as a lucrative destination for Canadian companies to expand and diversify.

Canadian companies like Thomson Reuters in media, Tim Hortons in beverages, and Brookfield Asset Management in finance that already operates in India can find an even greater footprint here. Canadian pension funds as well as Canadian agriculture & dairy too shall gain through greater access. At the same time, Indian companies like TATA Consultancy Services, WIPRO, and Infosys that are currently working in Canada will find greater opportunities for partnerships through an FTA.

In my recent meeting with the Canadian High Commissioner to India, H.E. Cameron MacKay, he said: “A trade and investment treaty with Canada will benefit India, and help it tap into cutting-edge North American value chains. Indian manufacturers would become more competitive through lower tariffs on world-class intermediate inputs from Canada. Indian food security would be strengthened by improved and predictable imports from a reliable agricultural supplier. Indian tech companies could more easily partner with Canadian leaders in areas like quantum and AI. And India would attract even more Canadian investors if those businesses knew their risks are mitigated by treaty protection. As global supply chains and investment flows re-organize around trusted partners, the time for India to act is now.”

India’s economy too offers tremendous opportunities for Canadian companies in emerging sectors such as transportation infrastructure, life science, clean energy technology, and renewable energy, as well as in traditional sectors such as infrastructure development, natural resources, defense and security, value-added food products, mining, and oil and gas. Science and technology collaboration, innovation, and educational linkages are also important areas of opportunity for Canadian businesses. India is looking for access to its textile and apparel products. Duty-free access for Indian apparel exports to Canada can boost exports by 10% to 20% which will help create more labor-intensive jobs in the country.

Given the vast upsides and unparalleled opportunities, Canadian companies must be more pragmatic, and the negotiators must be more open-minded in accommodating India’s interests. This is especially true in light of the mid-size scale of Canadian businesses and growing business chambers in India. Both countries are keen on coming to an agreement on the issue of visas for the entry of professionals- whether it’s Canadian architects and bankers going to India or its Indian IT professionals coming to Canada. Overcoming inhibitions that are limiting such exchanges must be sought at the earliest for mutual growth.

The collaboration for start-ups and innovation between the two countries is also continually expanding. The University of Toronto and the Indian Institute of Technology Bombay (IIT Bombay) are developing a new entrepreneurship program that will strengthen ties between the innovation ecosystems in Canada and India, benefitting start-ups in both countries.

The India-Canada Centre for Innovative Multidisciplinary Partnerships to Accelerate Community Transformation and Sustainability (IC-IMPACTS) is another partnership and area of close cooperation between the two. It brings together researchers, industry leaders, community members, and government officials to find solutions to key challenges affecting the quality of life of millions in India and Canada.

The Indian diaspora is one of the largest in Canada. With 1.83 lakh Indian students pursuing education at various levels in the country, Canada is the second most popular destination for Indians pursuing academic degrees on foreign shores. Indian students to Canadian universities form a disproportionately large percentage of international students received by Canada and it continues to be an attractive destination for Indian professionals as well. The two countries have forged strong people-to-people linkages over the years.

The Canadian cabinet itself today has three members of Indian origin. It is time for these amorphous relationships to take a more concrete shape for mutual growth. It is prudent both from an economic & geopolitical standpoint- that India and Canada approve an FTA within a year or as soon as possible. The upcoming year also provides a unique opportunity for India in the form of hosting the presidency of the G20. This would allow us space for a number of unexplored opportunities to be discussed, considered, and then taken up. An Indo-Canadian FTA is and should be, one of them.

Rajesh Mehta is a leading international affairs expert.

Author

  • Pazdin Dalal

    A marketing expert from Mumbai takes interest in covering defence and geopolitical issues. He has also been active in covering growth of private defence sector in India.

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