Simmering tensions between India and Canada not to imperil trade, investments

India is not planning to impose any measures to curb imports or investments from Canada, despite simmering diplomatic tensions between the two countries, two senior government sources in New Delhi said.

Ties between New Delhi and Ottawa deteriorated sharply after Prime Minister Justin Trudeau said in September his intelligence agencies were pursuing credible allegations tying Indian agents to the shooting of a Sikh separatist leader in Canada.

India has rejected Canada’s suspicions about its role in the murder of Hardeep Singh Nijjar, who was shot dead outside a Sikh temple in June in Surrey, a Vancouver suburb with a large Sikh population.

While officials from both India and Canada will try to resolve the diplomatic dispute, India’s government has no plans to impose curbs on imports or investments from Ottawa, said two senior government sources, who declined to be identified as they are not authorized to talk to media.

The political uproar over the issue and deteriorating diplomatic relations wouldn’t spill over into either a bilateral trade dispute or impact investment, they said.

Canada on Thursday pulled out 41 diplomats from India and had earlier paused trade treaty talks with India.

India imports potash, lentils, and energy products such as coal, coke, and briquettes among other goods from Canada.

India’s exports to Canada include consumer goods, garments, and engineering products such as auto parts, aircraft equipment, and electronic items.

Bilateral trade between Canada and India touched $8 billion in 2022.

Canada has invested more than $3.6 billion in India with over 40% of that being in services and infrastructure, according to Invest India.

Although Canadian lentil sales to India slowed down last month due to concerns over the diplomatic spat, New Delhi hasn’t asked importers to refrain from buying the protein-rich commodity from Ottawa.

(Inputs from Reuters)