Indo Canadian trade – History and recent initiatives

India gained its independence from the British Empire rule in 1947 and started the journey to become a developed country. Today India is an emerging power and has one of the strongest economies of the world. India’s political situation has stabilised and with its societies getting more modern, the market is expanding at a rapid rate.

During the early years of independence, India took assistance from countries all around the world including Canada to improve its economy. Canada started providing financial assistance soon after India becoming a free nation inspite of the differences in many of the policies. At one time, India received the largest aid of Canada’s international aid.

India tested its first nuclear explosive device commonly known as Smiling Buddha in 1974 which Canada believed to be of violation to the Colombo plan. Indo-Canada relationship suffered due to this difference of understanding between the countries. The bombing of Air India flight 182 further strained the relationship between the countries thus starting the cold war.

Major economic reforms were brought about in the early 90’s and India began growing its economy, increasing its visibility and impact on the global economy. Canada realised the need to expand its presence to Asian countries and identified India as a major market with abundant scope for commercialism. In the late 90’s, Canada initiated the move to improve bi-lateral relations. There have been a number of bilateral visits at the political level since thus moving forward the trade growth.

Trade between India and Canada has increased many folds in the past decade. Major exports from India to Canada include readymade garments, textiles, steel, jewellery, precious stones, leather products, coffee and tea, spices and carpets. India imported newsprint, pulp, lumber, peas, asbestos, iron, copper and other industrial materials from Canada.

There has been major increase in India’s export revenue in the past few years. The recent figures show that India exported 9.9 billion (US$) worth of goods in the year 2006. $131 billion worth of goods were imported in the year of 2006 which exceeds the US imports valued at 96 billion. Imports to India have grown 32% with an annual growth rate of 25%. India has a better balance of trade today than the US. Canada’s share in the Indian imports is less than 1%.

Canada is engaged in talks with India to initiate a Free Trade Agreement (FTA) between the countries. Currently India holds FTA with Thailand and Sri Lanka. Agreements between China and Singapore are ongoing. FTA locks the relationships between the countries and they are free to trade irrespective of the governments and other factors in place in both countries.

Mr. Pierre Pettigrew, International trade minister led a trade mission to India in the year 2002. He called the mission a‘re-engagement’ and it was the first that involved a private sector delegation. He met with many ministers of the Indian Government and visited major cities of India. He also participated in the opening of Canada Wood showroom in Mumbai.

Recently, Mr. Ted Menzies who is the Parliamentary Secretary to the Minister of International trade led a trade mission to India to promote Canada’s trade and its competitiveness. He visited New Delhi, Hyderabad and Mumbai from March 12 to 16, 2007. This visit stresses the fact that the Canadian Government is keen on developing investment and other trade flow between the countries. Minister for International trade David Emerson has said that improving relationship with India is a top priority for the Government and is finalizing the details to a Foreign Investment Protection and Promotion agreement (FIPA) with India.

There have been a lot of initiatives in the technology sector to forge ties between India and Canada. A new agreement has been formed between Information Technology Association of Canada (ITAC) and the National Association of Software and Service Companies (NASSCOM) in India. Canada competes with India in the field of outsourcing work from US with India leading the way. There are many concerns when dealing with outsourcing and both countries will stand to gain from sharing the knowledge. Mukesh Gupta, Director of Strategic Relations of Tata Consultancy Services Canada was instrumental in forging this alliance followed by a UN release last year that India and Canada are both competitors for outsourcing. Brian McFadden at Nortel and Paul Kent of Xwave were among the Canadian representatives in the mission. ITAC has entered into similar agreements with Hong Kong and Malaysia, but the agreement with India is different in the way the MOU is prepared. A committee involving senior officials from Canadian and Indian Information Technology companies has been formed and this committee is to invest time and focus in developing the relationship between the countries.

Nova Scotia perspective to Indo-Canadian relationship

The Nova Scotia government has improving trade with India on top of its priority list following suit of the federal government. Premier Rodney MacDonald’s government has set Atlantic Gateway as the number one priority. Atlantic Gateway is the project that would bring more business from Southeast Asia, particularly India into the province. Atlantic Provinces Economic Council recently conducted a study of the Gateway project and supports the initiative. The council confirms that the Gateway has the potential to increase the trade and also advance Canada in the global economy.

The Port of Halifax is the only seaport on the east coast that can handle the post Panamax vessels. Halifax port is 1840 nautical miles closer to India than the other west coast ports of North America. Halifax Port Authority (HPA) has entered into a partnership with the oldest freight forwarding company of India to create awareness for the Port. Karen Oldfield, CEO of HPA believes that trading with India is Canada’s next big opportunity and that Port of Halifax can play a major role in it.

Nova Scotia Business Inc.(NSBI) provides key information and helps companies develop their potential and stay healthy in the market. Stephen Lund, President & CEO of NSBI recently made a visit to India and was amazed at the opportunity provided by India. He believes Nova Scotia can play a big part in the economy growth of India keeping its Technology and resources in mind. He met with many Indian companies and some of the major IT companies of India to probe the opportunities of them setting up offices in our province and growing with Nova Scotia.

Vani Viswanathan