India, Canada diplomatic row unlikely to impact trade, investment ties: Govt sources

India and Canada's bilateral trade value is not significant and Canadian funds can route their investments through Singapore, the UAE and the US, said government sources

The escalation in the diplomatic row between India and Canada will not have an impact on the bilateral trade and investment ties between the two countries, government sources said on October 15.

They also said that the bilateral trade value is not significant and Canadian funds can route their investments through Singapore, the UAE and the US.

"India is a preferred investment destination," they said.

Canada is one of the primary sources of lentils for India and now that can come from Australia, they said, adding that Indian students and professionals would also have huge opportunities in different countries.

The bilateral merchandise trade between India and Canada actually grew slightly from $8.3 billion in 2022-23 to $8.4 billion in 2023-24.

India's imports from Canada increased to $4.6 billion, while exports saw a marginal dip, falling to $3.8 billion.

During April-July this fiscal, India's exports stood at $1.3 billion, while imports were $1.37 billion.

Think tank Global Trade Research Initiative (GTRI) too has stated that the diplomatic tensions between India and Canada have so far not impacted the bilateral trade in goods between the two countries.

However, it added that as this dispute drags on, both nations will need to carefully manage their actions to avoid a full-blown economic fallout.

India on Monday announced withdrawing its high commissioner and other "targeted diplomats and officials" from Canada after strongly dismissing Ottawa's allegations linking the envoy to an investigation into the killing of Sikh extremist Hardeep Singh Nijjar, in a major downturn in already frosty ties between the two nations.

India's decision came shortly after the Canadian Charge d'Affaires Stewart Wheelers was summoned to the Ministry of External Affairs (MEA) and was told bluntly that the baseless "targeting" of Indian High Commissioner Sanjay Verma and other diplomats and officials was "completely unacceptable".

The strain started when Canadian Prime Minister Justin Trudeau accused India of involvement in the killing of a Canadian citizen and Sikh separatist leader.

This allegation led to a back-and-forth expulsion of diplomats and paused Free Trade Agreement (FTA) talks.

India has received $4 billion in foreign direct investments from Canada during April 2000-June 2024.