How did this current diplomatic row between India and Canada start? 

On September 18, Canadian Prime Minister Justin Trudeau dropped a bombshell, stating  his government suspected India’s involvement in the killing of Canadian citizen and Sikh separatist leader Hardeep Singh Nijjar, on June 18, in British Columbia. 

What has been Indian government’s stand on the allegation? What were the retaliatory actions taken by the two countries? 

India has reacted strongly, calling the allegation “absurd”. New Delhi hit back saying Canada had long provided shelter to “Khalistani terrorists and extremists” who threaten India’s security. India has also accused Canada of not acting upon “specific evidence about criminal activities” by Canada-based individuals. India had declared Nijjar a terrorist in 2020. 

In a retaliatory move, India has expelled the chief of Canadian intelligence in India. New Delhi has issued travel warnings and stopped visa issuance to Canadians. India has also warned its citizens in Canada to “exercise utmost caution” due to what it calls “anti-India activities” in the nation. 

On its part, Canada too expelled a senior Indian official. Canadian Trade Minister Mary Ng, who was to lead a trade mission to India in October, has cancelled her visit. Earlier, Canada paused the over a decade long talks on a Comprehensive Economic Partnership Agreement that the two countries have been working on. 

How have other countries such as the US and EU reacted to the row? 

The West has been rather restrained in their reaction to the ongoing row as they see India as a counterweight to China. The Five Eyes — an intelligence-sharing alliance of the US, UK, Australia, Canada and New Zealand — have not extended whole-hearted support to Canada. Public statements by the US have been largely tepid.  

The US is positioning itself as a possible mediator between Ottawa and Delhi. According to experts cited by the BBC, Canada’s interests currently pale in comparison to India’s massive strategic importance. It’s unlikely Canada’s allies, including the US, the UK and France, “will cut ties with India due to Trudeau’s allegations”. 

What will be the impact if the stand-off worsens? 

The row is unlikely to escalate, as India has become too important for strategic and economic reasons. Before the current stand-off, Canada had been seeking deeper trade, defence and immigration ties with India. Ottawa had also indicated India was a “priority” market for Canada. 

However, if the crisis escalates, trade and investments could take a hit.  

In 2022, India was Canada’s 10th largest trading partner. Goods exports to India amounted to $5.4 billion and services exports, $6.2 billion, according to the Trade Commissioner Service. And imports from India were $6.4 billion and $2.9 billion, respectively. 

According to Trading Economics/UN Comtrade data, Canada’s top export to India in 2022 were fossil fuels and related products (nearly $1 billion), followed by fertilizers (close to $748 million), and wood pulp and plant fibres ($384 million). 

According to Reuters, more than 600 Canadian companies and organisations have a presence in India. Bilateral commercial relations between the two countries are worth $100 billion, which includes $70 billion of Canadian portfolio investment in India. Bilateral goods trade between Canada and India rose to $8.2 billion in 2022, up 25 per cent from a year earlier.  

Also, according to the Canadian Bureau of International Education (CBIE), India has been the largest source country for international students in Canada. In 2022, their number rose 47 per cent to nearly 320,000, accounting for about 40 per cent of total overseas students. If Canada imposes restrictions on student visas or the Indian government creates hurdles, it will reduce student inflow. This will hurt Canada as well, as CBIE data show Indian students contributed $4.9 billion to the Canadian economy in 2021.