The diplomatic tensions between India and Canada continue to escalate, with both governments claiming innocence while accusing each other. Data indicates that in 2007, India’s total imports and exports to Canada amounted to ₹ 7,323 crores and ₹ 4,906 crores, respectively, which by 2023 increased to ₹35,393 crores (imports) and ₹31,054 crores (exports). In other words, trade between both countries increased by over 5 times during this period.
The diplomatic tensions between India and Canada continue to escalate, with both governments claiming innocence while accusing each other. In today’s interconnected & globalized world, diplomacy & good relations between nations have become inevitable for security, technology, trade, and other crucial purposes. Our previous story on foreign visits of Indian Prime Ministers highlighted that between 1999 and 2024, the Indian PMs visited approximately 79 countries, resulting in numerous partnerships between India and other nations.
While diplomatic ties offer several benefits, they can also lead to negative consequences, particularly during political and other conflicts that adversely affect the people of both nations. Our earlier story demonstrated how trade between Bangladesh and India has grown over the years, which could be impacted by the ongoing political crisis in Bangladesh affecting people in both countries. The Canadian Minister of Foreign Affairs has publicly acknowledged the deep connections shared by the people of India and Canada, with thousands of citizens travelling between the two countries each year. Canada has expressed its desire to avoid diplomatic confrontations, seeking India’s cooperation in the ongoing investigation into the killing of Hardeep Singh Nijjar. The Indian Ministry of External Affairs also acknowledged the deep ties between the two nations but criticized the Canadian government for not providing any evidence linking the Indian government sources to Nijjar’s killing.
As these diplomatic tensions unfold, the eventual consequences remain uncertain. However, as noted previously, the unfolding situation could impact Indian students and the education sector, given that one-fourth of Indian students studying abroad are in Canada, and 41% of international students with valid study permits in Canada as of December 2023 are Indian nationals. To assess the impact of this ongoing issue, we examine the trends in trade between India & Canada in this story.
The data used for this story is sourced from Dataful’s country-wise exports and imports datasets, curated from data published by the Ministry of Commerce and Industry (MCI).
Value of Imports from Canada has been consistently higher than India’s Exports
There are 98 different goods and commodities (as per the 2 digit Harmonized System – HS code), traded between India and Canada, with the value of imports from Canada consistently exceeding India’s exports. According to MCI data, in 2007, India’s total imports and exports to Canada amounted to ₹ 7,323 crores and ₹ 4,906 crores, respectively, with a difference of about 49%. By 2008, both imports and exports had increased by 56% and 24%, reaching ₹11,427 crores and ₹6,126 crores, respectively. However, in 2009, both declined by around 10%, with imports dropping to ₹10,178 crores and exports to ₹5,505 crores. In 2010, imports further decreased by 7% to ₹9,444 crores, while exports saw a modest increase of 3.4%, reaching ₹5,696 crores.
After 2010, a consistent growth trend emerged in both imports and exports, though imports experienced occasional setbacks in 2016, 2018, and 2020 (a year affected by COVID-19), with declines of 1%, 25%, and 31%, respectively. Exports saw negative growth in 2015, with a slight decrease of 0.4% from the previous year. In 2023, a notable 7% decline in exports was observed, dropping from ₹33,413 crores in 2022 to ₹31,054 crores. Conversely, imports grew by 14% during the same period, increasing from ₹30,961 crores in 2022 to ₹35,393 crores in 2023.
Overall, from 2007 to 2023, imports and exports to Canada increased by 383% and 532%, respectively, without adjusting for inflation. Throughout this period, the value of imports generally remained higher than exports, except in the recent years of 2020, 2021, and 2022, when exports temporarily surpassed imports. However, by 2023, imports once again exceeded exports, with their total values reaching ₹35,597 crores and ₹31,054 crores, respectively.
Monthly Export data Year-on-year from 2022 to 2024 does not indicate a notable difference
As mentioned, the total value of India’s exports to Canada decreased by 7% from 2022 to 2023. Given the diplomatic tensions between the two countries, which began around August-September 2023, we analysed monthly export data from January 2022 to July 2024 to determine if there were any significant reductions in trade.
The export values in January for 2022, 2023, and 2024 were ₹2,348 crores, ₹2,538 crores, and ₹2,572 crores, respectively, showing a slight year-on-year increase for the same month. Similarly, the values for July during these years were ₹3,131 crores in 2022, ₹2,736 crores in 2023, and ₹2,754 crores in 2024. While there was a decline from 2022 to 2023, the figures slightly improved by 2024. In August and September of both 2022 and 2023, the values showed a decline from ₹2,797 crores to ₹2,714 crores, and ₹2,736 crores to ₹2,630 crores, respectively. However, October saw an increase in trade value from ₹2,295 crores in 2022 to ₹2,650 crores in 2023. The trend reversed in November, with a decrease from ₹2,649 crores to ₹2,422 crores, followed by another increase in December, rising from ₹2,698 crores to ₹2,754 crores.
Comparing the monthly figures from January to July for 2023 and 2024, each month in 2024 showed an increase in export values over the corresponding month in 2023. While the monthly data between 2022 and 2023 reflects mixed trends, the figures for 2024 demonstrate a consistent rise in export values from 2023 figures. Therefore, as of July 2024, the data does not indicate any significant changes in exports from India to Canada that can be directly attributed to diplomatic tensions.
Edible Vegetables, Mineral Fuels and Products, and Fertilizers are the most imported, while Pharmaceutical Products, Articles of Iron/Steel, and Organic Chemicals are the most exported
From 2007 to 2023, exports to Canada were highest in terms of Indian Rupees in the case of Pharmaceutical Products, Articles of Iron or Steel, and Organic Chemicals, with cumulative values reaching ₹22,076 crores, ₹21,901 crores, and ₹20,319 crores, respectively. Together, these three categories accounted for 24% of the total export value of ₹2,60,101 crores, while the top 10 export goods made up 58% of the overall export value. Notably, among the top 10 export categories, three were Textiles, Clothing, and Apparel products, two were Pharmaceutical and Chemical products, and one was Iron/Steel products.
During the same period, imports from Canada were dominated by Edible Vegetables, Mineral Fuels and Products, and Fertilizers, with total values of ₹67,413 crores, ₹55,946 crores, and ₹37,370 crores, respectively. These three categories represented 45% of the total import value of ₹3,52,057 crores, while the top 10 imported products accounted for 85% of the overall import value.
Safeguarding the interests of people should be paramount
While tensions between India & Canada are often traced back to the killing of Hardeep Singh Nijjar in June 2023, reports suggest the roots of the discord go back years. For instance, Aljazeera identified the genesis of the strained relationship in 2018 during Canadian Prime Minister Trudeau’s visit to India. In 2020, the Canadian Prime Minister, who leads a country with over 700,000 Sikhs (the largest Sikh population outside India’s Punjab), voiced concerns over the farmers’ protests in New Delhi. This intervention was criticized by the Indian government, and events following Nijjar’s killing have only deepened the rift between the two governments.
Despite Canada not being among the top 25 countries in terms of India’s trade, the trade between the two nations still amounts to thousands of crores each year and continues to grow. Both governments have acknowledged the deep ties shared by their people, underscoring the urgency to resolve political tensions to safeguard the interests of citizens on both sides.
