Diplomatic relations hit an all-time low this week after Canadian officials said they believed Indian government officials were involved in murder and extortion in the country.
The rift is now raising questions about the impact it will have on the deep trade and migration ties between the two countries.
Bilateral trade is worth billions of dollars, and Canada is home to approximately 1.7 million people of Indian descent.
A breakdown in relations at this level is uncharted territory, and what happens next will largely depend on how both countries choose to move forward, experts suggest.
Neither country has imposed tariffs or other economic retaliatory measures, but experts have warned that the situation could change and that a chill in India-Canada relations could hinder further economic growth. are.
“The biggest challenge, especially for businesses and the public, is uncertainty,” Arif Lalani, a senior adviser at government consultancy StrategyCorp and a former Canadian diplomat, told the BBC.
The two countries have been negotiating a bilateral trade deal on and off for more than a decade, but Canada suspended negotiations last year, just before Prime Minister Justin Trudeau publicly criticized India for the first time.
In September 2023, Prime Minister Trudeau said Canada had “credible suspicions” linking Indian government officials to the murder of Sikh separatist Hardeep Singh Nijjar, who was shot to death in Surrey, British Columbia, in June 2023. insisted.
India suspended visas for Canadian citizens shortly thereafter, but the action was short-lived and it resumed processing visas in November.
Meanwhile, trade relations between the two countries remained normal. Bilateral trade is worth around $8 billion (£6.15 billion), according to the latest financial figures from India’s Ministry of Trade.
Canada’s trade minister recently assured business owners that Ottawa is not trying to destroy trade relations with India.
Still, with continued uncertainty, Lalani said businessmen from both countries may look elsewhere for opportunities.
“People will think again about expanding trade or trying to build on what they already have,” he said.
Another major concern is how the rift will change the movement of people between the two countries. India has been Canada’s largest source of international students since 2018, with around 4% of Canada’s population being of Indian descent.
Karan Thukral, a Delhi-based lawyer, told the BBC that “the relationship between the two countries is deep,” adding that most of his clients are people eager to immigrate to Canada.
He said many people are currently worried about how diplomatic tensions will affect their plans to work or study in Canada.
Thukral said immigration checks continue to take place, but clients are advised to anticipate potential delays due to reductions in diplomatic staff in both countries.
He added that others, particularly Canadians with family in India, are worried about India reinstating visa restrictions on Canadian citizens.
Geoff Nankivell, president of the Canada Asia-Pacific Foundation, said any visa restrictions could impact business and negatively impact trade, tourism and investment.
“The Indian government has already indicated that it intends to suspend visas once, so it is possible that they will do so again,” he said, adding that the biggest impact will be felt in Canada’s large Indian diaspora community. Deaf added.
Nankibel said the diplomatic situation will continue to change and the fallout will be long as Canadian police pursue legal action against those suspected of complicit in Nijjar’s death and other criminal acts. He said it would continue for a long time.
“Temperatures will continue to rise,” he says.
Four people have been arrested and charged in connection with Mr. Nijjar’s murder, all Indian nationals in their 20s, but it remains to be seen if and how they are connected to the Indian government. It remains unclear whether
Trial dates for them have not yet been set.
Canadian police announced this week that “multiple investigations are underway” into allegations that Indian government officials were involved in “serious criminal activity” in Canada.
Prime Minister Trudeau on Wednesday sharply criticized Delhi’s alleged aggressive interference with Canada’s sovereignty and doubled down on his condemnation of India.
But he also cautioned that he did not want to damage economic and social relations.
“We don’t want to get into a situation where we pick a fight with an important trading partner,” Prime Minister Trudeau said at a public inquiry into foreign affairs. “We have deep human ties, a long history, and are fellow democracies.” ” he said. Domestic interference.
India fired back, calling Trudeau’s actions “reckless” and angrily saying Canada had not presented evidence to support its accusations.
Earlier this week, India said it “reserves the right to take further action” in response, and Canadian Foreign Minister Mélanie Joly said all options, including sanctions, were on the table.
This is a report from Jessica Murphy in Toronto.
