Under the Conservative government, Canada is taking aggressive action towards its International Trade policies outside of the United States and South America, and has expressed interest in developing stronger economic ties with India, one of the fastest emerging world superpowers. The two countries will be working towards establishing a free-trade agreement and developing their nuclear market, which will help India support and provide power to the 76 million rural households who have no access to electricity. The result would be an improvement in the quality of life, creation of jobs, and an increase in opportunities in India. Plus, Canadian companies will benefit from cheap labour.
The agreement could also give Canada a chance to contribute to India through research and development, technical know-how, and foreign direct investments in Indian manufacturing, infrastructure, and financial services. Canada will be able to carve a bigger share of “India Inc.” by supplying nuclear expertise and technology.
Currently, Canada is India’s 26th-largest supplier of goods and services with annual trade at $4.6 billion. The proposed trade agreement will increase that figure, provided there’s a stable environment for investors. With India’s high growth in the manufacturing and service sector, Canadian firms are keen to tap into this fairly unexplored market and forge joint ventures with Indian firms, who have developed business outsourcing capability.
On the other hand, Canada’s appeal to Indian businessmen is limited, but that too is slowly changing with one of India’s largest businesses, The Aditya Birla Group. It has recently acquired partnerships with three Canadian companies: AV Group (pulp and fibre), Novelis (aluminum), and Minacs (business process outsourcing).
With the new trade deal on the horizon, a few concerns arise. First, will the Liberal agenda support domestic growth or bilateral trade? If Ignatieff and his party do not prop up the Harper government, the talks could very well go by the wayside.
Second, Canadian businesses are synonymous with those in the U.S., and this hurts their chances of carving a separate identity in India. Canada may be unable to greatly increase its trade flow unless it makes a concerted effort to differentiate itself.
There’s also a concern over the implications of the nuclear deal on the environment. But if India abides by the international standards of safety, nuclear power can play an integral part in the larger strategy to decrease emissions that cause global warming. India will emit less CO2 in the future if it develops its nuclear program now.
With an ever-increasing Indian-Canadian population, both countries could use cultural diplomacy to pave the way for diplomatic talks. Canada needs to relax immigration rules, be more investor friendly, and ease up on taxes. This might help bridge the gap between nations half-way around the world.
Meanwhile, India needs to move its focus beyond the Pakistan conflict and work towards strengthening the country at a grassroots level. Power needs to shift from the few elite that currently run the nation to the ubiquitous poor who are longing for change and development. Establishing nuclear facilities will help the government achieve this goal faster and provide better quality life to its citizens.
When Prime Minister Stephen Harper goes to India to meet Indian Prime Minister Manmohan Singh next month—a visit that is meant to be a turning point in the negotiations—hopefully the deal will fall into place. Canada could revive its economy, and India could provide a higher quality of life for its 1.2 billion people.
