Diplomatic tensions have not yet "cooled down", Canadian-Indian businesses are having a headache "suffering the blow"

According to theglobeandmail.com, companies operating in Canada and India are being negatively affected by the diplomatic dispute between the two countries, which has dragged on into its second month.

Căng thẳng ngoại giao chưa thể 'hạ nhiệt', doanh nghiệp Canada-Ấn Độ đau đầu 'chịu trận'

The tense diplomatic relations between Canada and India have shown no signs of cooling down, causing deep concern among businesses from both countries. (Source: Travelobiz)

Constantly "talking back and forth"

Relations between Canada and India have been strained since September 2023, when Canadian Prime Minister Justin Trudeau accused India of being responsible for the murder of Hardeep Singh Nijjar, a Canadian Sikh citizen.

The constant back-and-forth between the two sides and the diplomatic tit-for-tat has begun to have an impact on the population, especially students. An estimated 2 million Canadians (5% of the population) are of Indian descent, while Indian students make up the largest group (40%) of foreign students studying in Canada.

Canadian Prime Minister Trudeau on October 21 criticized India's move as unprecedented and unreasonable, which could cause difficulties for millions of people in both countries because their travel, trade and education would be affected.

Meanwhile, the Indian Ministry of External Affairs asserted that the move was in line with Article 11.1 of the Vienna Convention on Diplomatic Relations. It also rejected any attempt to consider the practice of equality in diplomatic relations as a violation of international norms.

On trade, before the allegations became public, Canada canceled a trade mission to India and suspended trade talks that business groups had hoped would yield at least an interim free-trade agreement by the end of the year.

Tensions continue to escalate with no end in sight, such as Canada’s withdrawal of dozens of diplomats on October 19. Business leaders say these are adding to the uncertainty.

“Business wants clarity, stability and predictability, and all three are lacking,” said Victor Thomas, president of the Canada India Business Council. “In many ways, we are still trying to figure out how to navigate this new time.”

India has played a huge role in the Canadian economy through its diaspora. There were approximately 1.3 million Canadians of Indian origin in the 2021 census. However, this trade relationship has grown disproportionately.

India is Canada's eighth-largest trading partner, with exports of $5.6 billion ($4.1 billion) last year, a fraction of what Canada exports to the United States or China. Most of the exports are from resource extraction or agriculture.

Businesses are deeply concerned

Businesses had hoped a trade deal could turn things around. In May 2023, the two countries issued a joint statement saying they hoped an initial trade deal could be signed by the end of the year and lead to expanded investment in areas such as clean technology.

However, things went cold after the Nijjar affair in the summer, and trade talks were officially postponed in September.

“This is a huge shock and setback for the business community because it creates a lot of uncertainty about what happens next,” said Satish Thakkar, president of the Canada-India Foundation.

Businesses have been cautious about voicing concerns publicly in the tense diplomatic environment, but business groups say they are seeing growing anxiety from their members.

Of particular concern is India’s suspension of visa services, said Matthew Holmes, senior vice-president of government relations and policy at the Canadian Chamber of Commerce. “For service-intensive industries, such as information technology, this could be a serious concern over the long term,” Holmes said.

Continued visa processing problems could deal a serious blow to Canada’s efforts to attract international students, according to President Victor Thomas. About 40% of Canada’s more than 800,000 international students come from India, according to the Canadian Bureau for International Education. The federal government has also increasingly relaxed work rules for international students in recent years, making them a key source of labor for local businesses.

The India Times reported last week that member of parliament Vikramjit Singh Sahney is urging the Indian government to resume visa processing.

At an event on October 22, Indian External Affairs Minister S. Jaishankar said security concerns were the reason for the country's suspension of visas to Canada. India will resume issuing visas if there is progress in the safety of diplomats working there.

Canada has also warned of visa delays for Indian citizens over alleged threats to its diplomats.

Thakkar, president of the Canada-India Foundation, hopes that the diplomatic issues can be resolved so that the two countries can continue to build stronger ties. “India is a very important partner. Looking at future prosperity and growth, we need to strengthen our relationship with India. Whatever our issues are at the government level or the political level, we need to address them,” he said.

Source