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15 February 2018, Gateway House

How India-Canada business ties can bloom

Canada’s commercial relationship with India needs to go beyond lentils, uranium and other resources to explore the scope of greater cooperation on renewable energy and cutting-edge technology. There are strong reasons for the two countries to draw closer—even if other countries always loom larger. Prime Minister Trudeau visits India this week

Senior Fellow, Centre for International Governance Innovation

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They may call it the Social Summit.

Canadian Prime Minister Justin Trudeau is set to visit fellow social-media maven Narendra Modi later this month. Stops include the Taj Mahal, the Golden Temple, and Swaminarayan Akshardham in Gandhinagar, the capital of Gujarat. Trudeau’s itinerary also includes stops in Mumbai and New Delhi, two cities that know something about camera-worthy pageantry.[1] Prediction: the Canadian prime minister’s 4 million Twitter followers are in for a deluge.

If Trudeau can get #India trending in Canada, then this month’s visit might qualify as a success. (No significant announcements are expected.) Canadian trade with India has done quite well in recent years; exports of services surged 31% between 2000 and 2016, matching the growth of Canadian sales to China.[2] Still, in aggregate, Canada’s trade with India is a fraction of the value of its commerce with China. An energetic visit by a popular leader might change the course of Canada-India relations, provided Trudeau does not make the mistake of thinking the relationship can thrive on its own. It can’t. It needs regular attention.

There is a certain naivete in Canada about India, and this ought to be forgiven as everything looks so good on paper. The two former British colonies are democracies that respect the rule of law. Canada is rich in natural resources and capital, India’s fast-growing economy needs resources and investment. There are more than a million Canadians of Indian descent; those cultural and familial ties ought to make commercial and political relations easy.

But rarely in India are things as simple as they look on the surface.

Canadian officials have been working on getting their boss to India for about as long as he’s been in power. The Globe and Mail reported in January 2016 that Trudeau planned to lead a trade mission to India as early as March of that year.[3] There were hopes of a Republic Day invitation that never came. Trudeau and Modi have met three times, but always on the sidelines of various international gatherings. Neither has been the other’s priority.

That might surprise some people. India is certainly on the radar in Ottawa. Trudeau mentioned only two nations by name in the mandate letter he wrote for his trade minister: China and India.[4] Four of Canada’s 30 cabinet members are of Indian descent; indeed, Trudeau is fond of joking that he has more Sikh ministers than Modi. The desire to engage with the subcontinent is there.

However, it will take more than desire to bring Canada and India closer. Other countries will always loom larger.

For the foreseeable future, the Trudeau government, including its four Indo-Canadian cabinet ministers, will be focused on the United States and the renegotiation of the North American Free Trade Agreement (NAFTA). It is difficult to overstate NAFTA’s importance to Canada. Exports are the equivalent of about 40% of Canadian Gross Domestic Product (GDP), and three quarters of those sales occur in America. Trudeau’s ability to engage with the world will be constrained until President Donald Trump stops threatening to upend the foundation of North American commerce.

And yet the NAFTA trauma could trigger a new phase in Canada and Indian relations.

For the first time in decades, if not ever, the Canadian public is taking seriously the need to diversify beyond the U.S. market.[5] The Trudeau government chose to stick with the new Japan-led Trans-Pacific Partnership even after Trump quit the agreement. Canada is also pursuing trade pacts with China and ASEAN in Asia and the MERCOSUR and Pacific Alliance groups in Latin America.

Trudeau will gladly complete a trade deal with India too. The two countries have held on-and-off negotiations on the Canada-India Comprehensive Economic Partnership since 2010. The 10th round of talks was held in New Delhi in August 2017, more than two years after the conclusion of the previous negotiating session. Unless Trudeau works some magic on Modi, few observers see a trade deal coming together anytime soon.

That means Canada will need to seek other ways to stay engaged.

It will help that millions of Canadians now have financial stakes in India’s future. The country’s big public pension funds, including Canada Pension Plan Investment Board and Caisse de depot et placements du Quebec, have invested hundreds of millions of dollars in India in recent years and are planning more. Their presence makes Mumbai a rare international financial centre where Canadian firms sit atop the food chain. The pension funds, along with private-equity investors such as Brookfield Asset Management and Fairfax Financial Holdings, have cut a path for other Canadians to follow.

Canada needs to broaden the commercial relationship beyond lentils, uranium and other resources. Trudeau and Modi are both committed to fighting climate change, suggesting scope for enhanced co-operation on renewable energy. There is opportunity also on the frontiers of technology, where Indian startups, such as Paytm, and Canadian ones, such as Shopify, show potential, but are the underdog against behemoths from the United States and China. Trudeau should solicit the leaders of India’s technology champions the same way he’s courted Jack Ma, the chief executive and founder of China’s Alibaba. Canada and India could also work together at the Group of 20, the World Trade Organisation, and elsewhere, to keep the U.S. and China from writing the rules around Intellectual Property and digital data.

It will be important for Trudeau to follow quickly with something more substantive that covers these issues. Otherwise, it will become apparent that all the social media posts were for the benefit of Indo-Canadian vote banks back home.

Kevin Carmichael is Senior Fellow, Centre for International Governance Innovation.

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[1] Prime Minister’s Office, Government of Canada, Prime Minister to travel to India for state visit, 22 January 2018, <>

[2] Calculations by Asia-Pacific Foundation:

[3] Fife, Robert, ‘Trudeau sets sights on free trade deal with China’, Globe and Mail, 5 January 2016, <>

[4] Trudeau, Justin, ‘Minister of International Trade Mandate Letter’, 1 February 2017 <>

[5] Asia-Pacific Foundation, “2017 National Opinion Poll: Canadian Views on Engagement with China”, 3 May 2017, <>