{"id":20385,"date":"2025-10-01T16:24:27","date_gmt":"2025-10-01T16:24:27","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&p=20385\/will-artificial-intelligence-soon-become-artificial-influence"},"modified":"2025-10-10T13:34:26","modified_gmt":"2025-10-10T13:34:26","slug":"how-to-revive-economic-ties-with-india","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/trade-hub-commentary\/how-to-revive-economic-ties-with-india\/","title":{"rendered":"How to revive economic ties with India"},"content":{"rendered":"\n
\n
\n

An India-Canada reset is underway, and this time it will require a lot more than handshakes. <\/p>\n\n\n\n

Two years ago, Justin Trudeau sent relations between the two countries reeling. He publicly indicated the Indian government may have been involved in the murder of a Canadian Sikh activist, Hardeep Singh Nijjar, in Vancouver, creating the biggest bilateral crisis in decades. The two governments went on to expel diplomats, froze a range of visa services and suspended trade negotiations. Then came Trump, and a new age of America First that put every other foreign policy second.<\/p>\n\n\n\n

This week, the Carney and Modi governments began in earnest a difficult rapprochement that will require some compromise by both. More importantly, it will require them to declare what their mutual interests (rather than shared values) are in an increasingly divided world.<\/p>\n\n\n\n

Prime Minister Mark Carney himself opened the door to an interests-based policy when he invited Narendra Modi to the G7 in Alberta, in June. Modi, who was never enamoured with Trudeau, seized the olive branch.<\/p>\n\n\n\n

The two governments quickly appointed new high commissioners, and re-engaged on security issues, particularly over the Nijjar case, which they both want to prevent from dominating bilateral relations. <\/p>\n\n\n\n

This week, Foreign Affairs Minister Anita Anand and her Indian counterpart S. Jaishankar met at the United Nations, ahead of a possible visit to India this fall by Anand. And Ottawa quickly moved to action, labelling India\u2019s Bishnoi gang a \u201cterrorist organization,\u201d which will help both countries better police the concerning rise of Indian-based criminal activity in Canada.<\/p>\n\n\n\n

All that is good news for those wanting to restore an active partnership, especially for trade and investment. But it won\u2019t be a simple channel change back to a normalized relationship, as the two countries are on different economic, social and geopolitical wavelengths. They\u2019ll have to find some strategic points of interest.<\/p>\n\n\n\n

As Canada returns to India, it will need to navigate a more confident and independent power. Canada also needs to recognize that a decade of bilateral opportunities was either lost or fell short. And in that decade, India has changed significantly. <\/p>\n\n\n\n

It has achieved the highest nominal GDP growth among major global economies, while household incomes have nearly doubled, led by rural communities. As the world\u2019s most populous country, India now sees itself as an economic and political power for the mid-century. It\u2019s also quickly becoming one of the world\u2019s most advanced digital nations, with its Aadhaar<\/em> biometric ID system now covering more than 90% of the population.  <\/p>\n\n\n\n

In that decade, Canada added\u2014officially\u2014500,000 people of Indian origin, making South Asia now the largest source of immigration. <\/p>\n\n\n\n

Those two dynamics\u2014rising India and diverse Canada\u2014will require a careful balance.<\/p>\n\n\n\n

Carney, so far, has managed to rise above local politics to put Canadian interests at the centre of that balancing act. His government has signalled that a new chapter of India policy will focus first on economic issues, including better guardrails to ensure those interests are protected from diaspora politics.<\/p>\n\n\n\n

A more interests-based policy will need to strengthen commercial ties, for both trade and investment. Over the past five years, India has become a strategic option for many Canadians (and others) shifting away from China, even as relations with India chilled and then froze, interest among major investors heated up. Between 2019-2023, Canadian pension funds directed 25% of their investment flows to India, up from 10% over the previous 15 years, as it overtook China to become the second largest destination for Canadian pension funds, behind only the U.S.<\/p>\n\n\n\n

Ontario Teachers\u2019 Pension Plan has been at the forefront, investing over the past year in the infrastructure (the National Highways Trust), vehicle finance (Kogta) and AI (Darwinbox). The Brookfield group has been equally active, buying up clean energy assets and telecom sites and, in late September, signing a $1 billion (US) partnership with GIC, a Singapore sovereign wealth fund, to manage more than five million square feet of office space in three major cities, Mumbai, Bengaluru and Hyderabad.<\/p>\n\n\n\n

In trade, India has gone from Canada\u2019s 16th largest partner in 2008 to 10th in 2015 to 7th last year.<\/p>\n\n\n\n

The same can\u2019t be said about Canada, which ranks only 30th for India. Bilateral trade reached $31 billion in 2024, including services, compared to $117 billion with China. The decline in international students\u2014one of the largest sources of Indian revenue for Canada\u2014will further slow that progress, as Canada\u2019s perceived closed-door policy has tarnished our reputation across a generation of educated Indian youth.  <\/p>\n\n\n\n

That\u2019s not the only reason Canada\u2019s quest to restart trade negotiations may require patience. An increasingly confident India\u2014and confident Modi\u2014will not compromise easily, especially over issues like intellectual property rights, which India has long viewed as a form of Western colonialism. <\/p>\n\n\n\n

Those differences aside, the two countries have unique and deep ties, largely through the Indo-Canadian population. Going forward, India will want a more mature relationship, based on interests, especially economic interests. Canada can pursue greater opportunities, too, from heavy oil and LNG to advanced manufacturing and space technologies. <\/p>\n\n\n\n

A renewed relationship will require both countries to recognize what they bring to each other. It can also stress what they can achieve through alliances and multilateral groups. Both Anand and Jaishankar rooted their UN addresses this week in the need for multilateralism in an America First world. India, as a rising second-tier power, and Canada, as a challenged middle power, can both find strength in collective efforts.<\/p>\n\n\n\n

Fifty years ago, in 1975, India-Canada relations hit their lowest point after Indira Gandhi\u2019s government tested a nuclear bomb the year before and then declared a State of Emergency. The relationship didn\u2019t recover until Jean Chr\u00e9tien travelled to India in 1996.<\/p>\n\n\n\n

For both countries, too much is at stake for another long winter of discontent. <\/p>\n<\/div>\n<\/section>\n\n\n\n

\n
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John Stackhouse <\/strong>is a former editor-in-chief of The Globe and Mail and was its correspondent in New Delhi from 1991 to 1999. He is Senior Vice President, Office of the CEO, at RBC, and a senior fellow at the Munk School of Global Affairs & Public Policy at the University of Toronto.<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

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