Beyond the shared association of Commonwealth countries, the modern iteration of the India – Canada relationship began in 2015, when Prime Minister Narendra Modi became the first Indian Prime Minister to visit Canada for a bilateral state visit since 1973. The visit resulted in many important agreements in the sectors of civil aviation, education and skills development, space cooperation, as well as the Agreement on Social Security that came into force that year. Most notably, however, was the elevation of the bilateral relationship to one of a strategic partnership that has elevated India – Canada commercial ties during the last seven years.
Prime Minister Justin Trudeau’s state visit to India in 2018 further reaffirmed the breadth and scope of the strategic partnership and introduced a wide range of new initiatives and agreements spanning education, security, sustainable development, trade and investment, and women’s health and empowerment.
Today, India is Canada’s twelfth largest trading partner for its imports, with total bilateral merchandise trade at CAD 13.67 billion in 2022, a remarkable increase from 2021’s trade figures worth CAD 9.02 billion. The bilateral merchandise trade stood at CAD 8.68 billion in 2020 during the COVID-19 economic slowdown. The two-way services trade reached CAD 8.92 billion in 2022 but the potential for trade between the two economies is much higher.
Snapshot of Bilateral Investments
India and Canada also have strong investment linkages and direct investments between the two countries are growing. Canada is the 18th largest foreign investor in India and Canadian Pension Funds and other financial institutions have pledged portfolio investments of over CAD 60 billion at time of publication. Canada’s cumulative investment in India was CAD 4.3 billion from April 2000 to December 2022, which comprised 0.51% of the total FDI inflows into India.
More than 1000 Canadian companies are actively pursuing business in the Indian market in various sectors such as IT (Information Technology), Engineering Services, Aviation, Transportation & Commercial/Business Aircrafts, Processed Food, Pharmaceuticals & Health Science, Financial Services, Banking and other business consulting services.
Indian Companies in Canada
A recent survey by CII reported that the aggregate amount of tangible investments made by Indian companies in Canada exceeds CAD 6.6 billion. The investments made since inception reflect capital expenditure which includes real estate, fixed assets, machinery and technology, as well as mergers and acquisition activity.
While most companies show a single entity presence in the country, several technology and pharmaceutical companies reported having several subsidiaries to maximize investment impact and enhance proximity to their customer base.
The sample size of almost 30 Indian companies that reported into the survey only points to a much higher investment amount on the ground, as the estimated number of Indian headquartered companies present in Canada is close to 75-80.
The substantial diversification of industry sectors in which Indian companies are engaged in Canada is well-demonstrated in the survey results. Technology Services lead the charge with 32% of the companies operating in the ICT and Telecom sectors. Manufacturing and Engineering as well as Life Sciences, Pharmaceuticals and Healthcare are a close second, with a near-equal distribution. Other represented sectors include Financial Services, Food & Retail, and Energy and others.
The Future of Indo-Canadian Partnership
As the global economy continues to recover, Canada offers many opportunities for Indian companies looking to expand their business footprint not only in Canada, but the wider North America market as well. The reported future plans for Indian companies in Canada indicate a vigorous economic partnership and an optimistic outlook.
Of the surveyed companies, 100% of the responding companies plan to invest more across Canada in the next five years, a significant statistic given the ongoing global pandemic during the report’s data collection period. 96% are planning future hires and 86% anticipate investing in more R&D.
While Ontario has the largest concentration of Indian companies in Canada and was cited by the surveyed companies as the country’s most favorable business environment, the provinces of British Columbia and Quebec tied as the second most favorable environments, followed by Alberta and Newfoundland and Labrador. These responses reflect greater trends of Indian Industry’s expansion across Canada and are expected to continue diversifying in future editions.
The companies that responded to CII’s survey are a sample of the current level of bilateral economic engagement, and the extent of the true impact of Indian investment in Canada is expected to be considerably deeper than the aggregate results reported.
With the resilience and vigor of business activity and several foundational agreements under bilateral negotiation, the future is bright for India-Canada economic partnership.
To know more about Indian Industry’s growing Canadian presence, download the report “From India to Canada: Economic Impact and Engagement”.