The diplomatic tensions between India and Canada have escalated since 2019, fueled by political differences and accusations. The row stems largely from Canada’s stance on the Indian government’s actions, especially concerning the farmer protests and alleged human rights issues in India.
Canadian leaders, including Prime Minister Justin Trudeau, have often voiced their concerns about India’s internal matters. This interference has been seen by India as a breach of its sovereignty, leading to a strained relationship between the two nations. Over the years, the rift has only deepened, with both countries issuing statements that reflect growing distrust.
The diplomatic row intensified in 2023 when India accused Canada of harboring Sikh separatist elements. The Indian government expressed frustration over Canada’s perceived leniency toward groups advocating for an independent Khalistan, a separatist movement in India. This issue sparked sharp responses from both sides, further straining bilateral ties.
Diplomatic meetings became infrequent, and trade discussions slowed. Despite this, economic interactions between India and Canada remained significant, particularly in sectors like infrastructure and technology. However, the ongoing diplomatic tension escalated on Monday when India expelled six Canadian diplomats.
The Ministry of External Affairs issued a statement listing the diplomats, including Acting High Commissioner Stewart Ross Wheeler, Deputy High Commissioner Patrick Hebert, and first secretaries Marie Catherine Joly, Ian Ross David Trites, Adam James Chuipka,
and Paula Orjuela. These diplomats have been asked to leave India by 11:59 PM on October 19, 2024. The Ministry of External Affairs further announced the withdrawal of its high commissioner and other diplomats after Ottawa labeled them as “persons of interest” in an investigation related to the killing of pro-Khalistani terrorist Hardeep Singh Nijjar. The diplomatic row has further strained relations between the two countries.
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One key area that could be affected by the diplomatic row is the Canada Pension Plan Investment Board (CPPIB). The CPPIB has been an active investor in India’s infrastructure, real estate, and technology sectors. It has invested billions of dollars in various Indian companies and projects, seeing India as a key market for long-term growth.
However, political tensions between the two countries might jeopardize future investments. India’s government could potentially take a hard stance, making it difficult for Canadian firms, including pension funds, to operate freely in the country. Additionally, strained diplomatic ties could lead to stricter regulations or delays in approvals for new investment projects.
Despite these potential challenges, the Canada Pension Fund may continue to view India as a lucrative market. India’s fast-growing economy, large population, and infrastructure needs make it an attractive destination for long-term investments. The CPPIB might try to navigate the political tensions by focusing on economic cooperation, separate from political issues.
Investors might also rely on local partnerships to mitigate the risk of diplomatic fallout. Nonetheless, the ongoing diplomatic row creates uncertainty, which could impact investor confidence and slow down the flow of capital from Canadian institutions to India.
In conclusion, the India-Canada diplomatic row, rooted in political disagreements and external interference, has created a challenging environment for bilateral relations. While the Canada Pension Fund has substantial investments in India, ongoing political tensions could disrupt these financial ties. The extent to which this will affect future investments depends on how both governments handle the situation. If tensions escalate further, it could result in a more restrictive investment environment.
Written By: Dipangshu Kundu
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