India and Canada had set ambitious trade targets of achieving $15 billion by 2015, but as of 2018, this remains around the $8 billion mark. Given the unrealized potential, NAFTA’s uncertainty and Canada’s critical need for market diversification to reduce over dependence on the USA, there have been significant developments in recent times, signaling growing business confidence and investor interest between both countries.
The presence of Canadian companies operating in India has steadily increased to 400+ and around 100 Indian companies are responsible for over a billion dollars of investment in Canada, potentially creating 5000 jobs in the coming years. These are usually a mix of small and medium enterprises (SMEs) at both ends. Canada is a coveted destination for the Indian diaspora, especially with the Canadian flagship programme for economic migration.
India’s export trajectory includes products across wherein the country has growing production possibilities and intensive global presence, including pharmaceuticals, natural pearls and semi-precious stones, textiles, pulp mills, furniture etc.). Canada exports to India pulses, newsprint, wood pulp, asbestos, potash, iron scrap, copper, minerals and industrial chemicals. Investment-wise, Canada is the 23rd biggest investor in India with the FDI between 2000 and 2017 valued at $1.12 billion. As of 2016, the cumulative Indian investment into Canada was pegged at $2.2 billion across IT, software, steel and natural resources.
Bottlenecks exist in the form of policy inertia on both sides, regarding the Comprehensive Economic Partnership Agreement and the Foreign Investment Promotion and Protection Agreement.India is a major market for Canadian agri-food products, but Indian food tariff policies and barriers limit the growth of this sector. Pulse crops account for over 95% of Canadian agri-food exports to India.
Against the backdrop of Canadian PM Justin Trudeau’s visit to India in 2018, the PHD Chamber of Commerce and Industry declared that in the next three years, Indo-Canadian trade is expected to double and reach $10 billion. During his visit, Trudeau’s engagement with Indian business leaders led to the announcement of a two-way $1 billion deal, with one-quarter moving from India to Canada and $750 million moving vice-versa.
The rapidly expanding economic opportunities and linkages in India across emerging sectors like agri-machinery, advanced manufacturing infrastructure, food-processing, transportation, clean/renewable energy technology and life-sciences or traditional sectors like natural resources, security and defense, oil and gas, mining, value-added food products, digital innovations, science and technology, education, tourism can provide incremental growth.
FDI is the most efficient solution to overcome geographical challenges, transportation costs etc. with processed, high-value durable items constituting the Indian basket, given Canada’s per-capita income and affordable, bottom-of-pyramid products and services shaping Canadian presence in the Indian market, given the Indian population size. The Indian diaspora can be effectively leveraged for harnessing growth of trade as well as facilitating cooperation at the sub-national level in the form of city-city collaborations.
For Indo-Canadian relations to emerge as force-multipliers in the global business and investment landscape, successful collaborations in strategic sectors like agriculture, energy, infrastructure and education must be leveraged to strengthen bilateral ties and global competitiveness. Since, SMEs form the linchpin, India must fortify its investor-friendly ecosystem.
The current economic climate is such that while the developing economies have begun to benefit from open trade and economic integration, the developed countries have switched gears by moving away from economic globalization towards inward-focused policies in a new multipolar world order. Within the context of this shifting global dynamic from the Atlantic to the Indo-Pacific, India’s economic transformation and structural reforms have garnered traction and support amongst long-standing natural allies like Japan, EU, UK and the US. Yet, India must strive to build and invest in sustainable bilateral relationships with other partners like Canada.
India Outbound
January 4, 2019
source https://indiaoutbound.org/boosting-indo-canadian-business/
No comments:
Post a Comment