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It is surprising that after a recent successful G20 meeting in New Delhi under India’s Presidentship and attended by the US President and the UK Prime Minister among others, India would get embroiled in an unseemly battle with an apparently ‘friendly’ country like Canada. Following an unprovoked comment by the Canadian Prime Minister Trudeau – that India was involved in the murder of a Sikh in the Canadian soil – all hell seems to have broken loose. The two countries have reacted by expelling diplomats, visa rules have been tightened and sanctions imposed on trade and commerce. Suddenly, the geopolitical scene seemed to have turned uncertain and murky.

When India was flying high in global politics and everybody was praising not just the Prime Minister Modi but also his diplomat turned foreign minister S. Jaishankar, why on earth should India take such a step which might pull the country quite a few rung down the ladder of global reputation? China is happy that the US-India efforts to rope in the world against the Chinese aggression will now take a beating. At least, it will slow down. Global observers tend to believe that the US President is playing a ‘double game’. The initial warmth with India seems to be cooling off.

But what is a matter of immediate concern is India’s growing trade relationship with Canada. And  the fate of the Indian students who migrate in large numbers to Canada to do their higher studies. The number of tourists who come from Canada, which has grown threefold from 2021, is likely to see a sharp fall. India and Canada has an $8 billion a year trade relationship which includes $4.1 billion exports from India. The ongoing negotiations for a free trade agreement between the two countries have paused. India is a leading exporter of smartphones to Canada while it depends on Canada for imports of fertilizers and lentils.

More than half of annual foreign tourists in India come in the last three months of the year. December is the month when arrivals peak and so do foreign exchange earnings from tourism. Bookings for December which happen around August-October is expected to be a washout. Canadians who have planned to visit India are likely to reconsider.

Canada accounted for 4.5% of all foreign tourists that arrived in India in 2022. Over one trillion rupees have been sunk in Indian companies in the last few years through Canadian funds. Of late, Canadian pension funds have been active with investments in companies like Wipro, Infosys, ICICI, Kotak Mahindra and start ups like Paytm, Zomato, Nykaa and Delhivery. There are over 600 Canadians firms operating in India. All these organisations are likely to be seriously affected by the recent souring of relationships between the two countries.

In 2022, 226,000 of the total 550,000 students who landed in Canada for higher studies were Indians. The student community forms one of the strongest ties between India and Canada and many academic institutions in Canada benefit from the Indian students.

Much of the global politics is driven by economic compulsions. But in recent times politics seems to take such a dominant position that people tend to ignore the economic realities.  It appears both in internal state relationships within India and also with countries external. The young prime minister of Canada may have made an indiscrete remark at the G20 meeting. Surely, it could have been tackled more wisely. Instead, the kneejerk reaction of India is tantamount to over-reaction. 

In recent times, India’s strategies in foreign relations have changed dramatically. It has become aggressive and in some cases it has succeeded too. None has heard of

“surgical strikes” in the pre-Modi era. It helped in fanning up the ‘nationalist streak’ in a large number of people which helped win internal elections. But in this case we are perhaps raking up a ghost of Khalistan which was having a slow natural death. Internally, it did not work during the farmers protest in Punjab. Modi government had to retreat. Perhaps we are taking a  major risk in our tussle with Canada.