Central Idea

India and Canada are currently facing escalating diplomatic tensions, with India suspending visa services in Canada and Canada making adjustments to its staff presence in India.
Amidst this backdrop, let’s take a closer look at the trade ties between these two nations.

Understanding India-Canada Trade

Trade Volume: In the last fiscal year (2022-23), India’s total trade with Canada amounted to $8 billion, which represents approximately 0.7% of India’s total global trade valued at $1.1 trillion.
Balance in Bilateral Trade: Bilateral trade between the two countries has been relatively balanced. For instance, in 2022-23, both imports and exports were approximately $4 billion each, resulting in a modest trade surplus of $58 million for India.

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Mineral Fuels and Oils: India’s primary imports from Canada include mineral fuels, mineral oils, and related products, which account for nearly half (46%) of the total import value.
Wood Pulp and Paper Waste: Wood pulp and paper waste are another significant category of imports from Canada.
Edible Vegetables: Edible vegetables and certain roots and tubers also make up a substantial portion of India’s imports from Canada.

Pharmaceutical Products: India primarily exports pharmaceutical products to Canada.
Articles of Iron and Steel: Articles made of iron or steel constitute another major category of exports.
Machinery and Mechanical Appliances: Nuclear reactors, boilers, machinery, and mechanical appliances are among India’s top exports to Canada.

Muriate of Potash (MOP): Canada is a crucial supplier of muriate of potash (MOP) to India, a widely used fertilizer. Canada’s share in India’s MOP imports has been substantial.
Masur (Red Lentil): Canada is also India’s largest supplier of masur or red lentil, a significant pulse crop.
Impact on Masur Imports: The ongoing India-Canada standoff has raised concerns, especially regarding masur imports. Masur has become a substitute for arhar/tur (pigeon-pea), with implications for prices and trade dynamics.
Yellow/White Peas: India used to import yellow/white peas as a substitute for chana (chickpea), primarily from Canada, until 2017-18.

Geopolitical Worries: The diplomatic tensions have led to concerns about the availability and size of Canada’s masur crop. The 2023 crop is smaller than the previous year’s, impacting landed masur prices.
Yellow/White Peas: Yellow/white peas, once a significant import, have faced fluctuations in trade volumes with Canada.

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Since 2018, India has been the largest source country for international students in Canada.
In 2022, their number rose 47 percent to nearly 320000, accounting for about 40 % of overseas students, according to the Canadian Bureau for International Education.
It also helps universities and colleges provide subsidised education to domestic students.

Trade Dynamics: India and Canada maintain a balanced trade relationship, with certain critical imports like MOP and masur playing pivotal roles in India’s agricultural sector.
Impact of Diplomatic Tensions: The ongoing diplomatic tensions could potentially affect trade dynamics, especially in the case of masur imports, raising concerns about supply and prices.
Trade Relationships Evolving: India-Canada trade relations continue to evolve, and the resolution of diplomatic tensions will influence the future direction of this trade partnership.