How will different areas be affected by the deteriorating India-Canada relationship?

Since Prime Minister Justin Trudeau charged New Delhi with planning the murder of a Sikh separatist leader in British Columbia, relations between Canada and India have gotten worse. The diplomatic impasse now poses a threat to their economy.

Read more : Canada updates travel advisory for India as Hardeep Nijjar killing row escalates: ‘Remain vigilant

Foreign Education serves as major source of Income for Canada

Following New Delhi's safety warning against Canada due to "anti-India" actions, Indian students may start to avoid Canada for higher study. This may have an impact on a sector that generates roughly $16.3 billion ($22 billion) in annual income for Canada.

A prospective early-stage trade agreement is at risk, which might harm India's aspirations to win over the West and compete with China in the supply chain. Potash, a crucial ingredient for crops, may no longer be accessible to India.

Senior diplomats from the opposing side have already been expelled by both countries in a rivalry escalation. As security threats increase in the South Asian nation, Canada wants to cut its embassy staff there. At the same time, New Delhi has ceased granting Canadian citizen’s visas.

28% of foreign students in Canada are Indians

The majority of foreign students pursuing higher education in Canada are Indians. They accounted for more than 28% of all foreign students in 2022, according to Canadian local media.

A sizeable industry, higher education accounts for more than 15% of Canada's yearly service exports. According to Global Affairs Canada's most recent data, overseas students alone contributed 1.3% to Canada's GDP in 2019.

90% of Canada's labour force growth is due to immigration

According to government statistics, Indians account up over a fifth of immigrants to Canada, the greatest proportion from a single country of birth since 1971. Remittances from Canada comprised less than 1% of the total amount flowing into India, partly attributable to immigrants who settled permanently in Canada and brought their families.

90% of Canada's labour force growth is due to immigration because of a rapidly aging working population.

India's major dependency on Canada for potash

The two main goods that India exports to Canada are pharmaceuticals and iron and steel goods. Before Canada halted the negotiations in advance of the Group of 20 leaders meeting in New Delhi, the countries were in the early stages of drafting a trade agreement.

In 2022–2023, commerce between the two countries was $8.16 billion, a tiny fraction of India's $128.7 billion bilateral trade with the US. India, however, purchases a significant portion of the crop nutrients from Canada, the world's largest exporter, as it relies almost exclusively on imports to meet its potash demands.

Given how much trade and expansion ambitions for Russia and Belarus have been hampered by sanctions, exports from Canada have become more crucial.

According to government data, India received $3.60 billion in foreign direct equity investments from Canada between April 2000 and June 2023. It only accounts for 0.56% of all FDI that enters India, compared to $61.26 billion in FDI from the United States in the same period.

Analysts worry that the dispute may have an unfavorable effect on investments despite a top Indian officials claim that there is not an immediate impact on them.

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