Rising tensions between Ottawa and Delhi raise questions over the future of economic and social ties, impacting trade, immigration, and the diaspora community.Â
Deepening this week after claims by Canadian officials linking Indian government operatives to a campaign of murder and extortion on Canadian territory, a diplomatic impasse between Canada and India has Given the two nations significant economic and social linkages; the growing tensions have sparked questions regarding their effects on trade, immigration, and the more general relationship between them.
How Are Bombshell Allegations Straining Relations?
Following Canadian Prime Minister Justin Trudeau’s allegation of Indian government operatives participating in the June 2023 murder of Sikh separatist leader Hardeep Singh Nijjar in Surrey, British Columbia, diplomatic ties between Ottawa and Delhi have reached an all-time low, and in September, Trudeau disclosed that Canada had “credible allegations” linking Indian officials to Nijjar’s murder.
Although neither nation has yet instituted economic penalties or other reprisals, analysts caution that the situation may worsen. One professional thinks that the most challenging obstacle will be ambiguity.
“Going to be the biggest challenge, especially for business and citizens, is uncertainty,” said a top advisor at a government consulting firm. He cautioned that the diplomatic impact might cause business people in both nations to seek prospects elsewhere.
What Could Be the Impact on Bilateral Trade?
Bilateral trade between Canada and India is notable, with estimates of $8 billion yearly in commerce based on the most recent data from India’s trade ministry. Trade between the two countries has continued unhindered despite diplomatic strains. Extended strain on relations, however, raises concerns about a chilling effect on corporate investments and growth.
The two nations have been in on-and-off negotiations over a bilateral trade deal for more than ten years. Still, talks were stopped last year after Canada first expressed concerns over India’s purported role in Nijjar’s murder. Since then, uncertainty has generated concern in corporate circles.
The consultant said, “People will be thinking twice in terms of expanding trade or trying to build on what they already have.”
The Trade Minister of Canada reassured companies that Ottawa does not aim to sour relations between Canada and India. Still, the possibility of a full-scale diplomatic collapse worries me as hostilities keep rising.
Will Immigration Ties Be Jeopardized?
Beyond trade, immigration and people-to-contact between the two countries would be the most important effects of the diplomatic divide. Since 2018, India has been Canada’s largest source of overseas students; over 1.7 million Canadians, or about 4% of the country’s population, are of Indian descent.
“The human link between our countries is strong,” said a Delhi-based lawyer with numerous clients yearning to relocate to Canada for employment or educational possibilities. His clients are now, he observed, more worried about how the diplomatic conflict could interfere with their preparations.
Although immigration processing is still under operation, he has urged clients to prepare for possible delays, mainly resulting from the smaller diplomatic staff in both nations. Visa restrictions, which India temporarily imposed on Canadian nationals in 2023, also raise questions about whether they could once more be reinstated.
“This tension is already causing anxiety, especially for those who have family in India or who depend on regular travel between the two countries,” the lawyer said.
Could Visa Restrictions Impact the Economy?
India briefly stopped granting visas to Canadian citizens in September 2023, only picking up processing two months later. Although such action was temporary, analysts warn that if relations deteriorate, such actions could be reinstated. Another visa suspension would have side effects, according to one expert.
“The Indian government has already shown its willingness once to suspend visa issuing; so it’s possible they could do so again,” he stated. Such limitations, he said, may have a “dampening effect on trade, tourism, and investment,” while the Indian diaspora population in Canada would most certainly feel the most damage.
Along with lowered diplomatic staff and visa suspension, they could hold down immigration case processing, upsetting the flow of Indian workers, students, and visitors to Canada. Families and people would suffer as much as companies depending on these cross-border ties.
What Is the Path Ahead Amid Uncertainty?
Experts caution that the diplomatic split might have long-lasting effects as it widens. Investigating the murder of Hardeep Singh Nijjar, Canadian law enforcement is also seeking legal action against four Indian nationals in their 20s who have been arrested and charged with the crime. Still unknown, though, is whether and how these people relate to the Indian government.
Tensions have been kept high by Trudeau’s doubling down on his charges against India and by the continuous probe. In a public inquiry on foreign intervention in Canada, Trudeau stated, “We don’t want to be in this situation of picking a fight with a significant trading partner, with whom we have deep people-to-person ties and a long history and are fellow democracies.”
Conversely, India has denigrated Canada’s assertions as unfounded. Indian officials have labeled Trudeau’s actions as “cavalier,” and they have also charged Canada with not offering proof to support the allegations. India said earlier this week that it “reserves the right to take further steps” in reaction to the situation; Canada’s Foreign Minister said that all options—including sanctions—remain on the table.
What Are the Long-Term Consequences?
Experts believe this diplomatic fallout’s long-term effects will become more apparent as the situation develops. Both nations must balance retaining important commerce and social ties with controlling the present tensions.
One expert observed that the continuous probes and court cases would probably “raise the temperature” between the two governments. With immigration linkages and economic ones hanging precariously, there is a significant risk of a more severe relationship divide.
“The uncertainty will keep many — especially company owners and those with familial ties — up at night. The expert said, “This is an unparalleled scenario with high stakes for both sides.”
