India-Canada row overshadows growing trade ties

A diplomatic falling out between India and Canada over allegations that New Delhi was behind the killing of a Canadian Sikh activist threatens to overshadow increasingly close trade and investment ties between the countries.

Last year India responded angrily after Canadian Prime Minister Justin Trudeau publicly accused it of involvement in the murder of separatist Hardeep Singh Nijjar, who had been wanted by New Delhi and was shot dead in June 2023 near his home in Vancouver.

Indian authorities briefly curbed visas for Canadians and forced Ottawa to withdraw several diplomats.

Relations slowly improved, but this week both sides expelled the other's top envoys and other diplomats after India said its ambassador was among the "persons of interest" named in the murder probe.

With neither side appearing ready to back down, Trudeau on Oct. 14 branded India's behavior "unacceptable," while New Delhi has called the allegations "ludicrous," a prolonged diplomatic rift could eventually impact economic ties.

"As this dispute drags on, both nations will need to carefully manage their actions to avoid a full-blown economic fallout," Ajay Srivastava of the New Delhi-based Global Trade Research Initiative said in a brief.

India's trade with Canada is small in comparison to some of New Delhi's biggest trading partners, but it has grown steadily.

Bilateral merchandise trade rose from $6.36 billion to $8.27 billion between the 2019 and 2023 fiscal years, according to India's Commerce Ministry.

And so far it appears to have weathered the storm, rising again, marginally, to $8.4 billion in fiscal 2024.

India's biggest exports to Canada include pharmaceuticals, steel and iron products and electrical machinery.

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