Pulse of trade: How India-Canada tussle will affect commerce

According to the Ministry of Commerce and Industry, India-Canada bilateral trade was 0.93 per cent of India's total trade in 2016-17. This fell to 0.75 per cent in 2023-24. 

In Short

• India and Canada expel diplomats amid diplomatic crisis
• India-Canada trade is less than 1 per cent of India's total trade
• Pulses are a significant part of India's imports from Canada

Diplomatic turmoil is in the air. Both India and Canada expelled each other’s diplomats from the countries after the latter alleged Indian agents engaged in activities that threatened public safety on its soil. This is just the latest in a series of diplomatic crises between the two nations that began with Canada blaming India for its role in the assassination of Hardeep Singh Nijjar in June 2023. With de-escalation appearing distant, a pertinent question is: how will this affect trade?

LITTLE TRADE WITH CANADA

Canada comprises less than one per cent of India’s total trade. According to the Ministry of Commerce and Industry, India-Canada bilateral trade was 0.93 per cent of India’s total trade in 2016-17. This fell to 0.75 per cent in 2023-24.

INDIA NARROWED TRADE DEFICIT WITH CANADA

India has consistently increased exports to Canada. From $2.0 billion in 2016-17, exports have shot up to $3.8 billion in 2023-24. In the same duration, imports from Canada rose from $4.1 billion to only $4.6 billion. This helped India narrow the trade deficit from $2.1 billion to $0.7 billion.

Drug formulations, iron and steel, cotton garments and fabrics, marine products, and gold and other jewellery are India’s top exports to Canada. On the other hand, pulses, coal, fertilisers, pearls and other precious stones, and iron and steel are amongst the top products India imports.

THE PULSE CONNECTION

Canada is important to India due to its pulses. Pulses made up 20.4 per cent of imports from Canada in 2023-24. In fact, 25 per cent of India’s overall pulse import was only from Canada, followed by Myanmar, Australia, Tanzania, Mozambique, and Russia.

Despite pulse being a staple food in India, its import dependency stood at nine per cent in 2021-22, according to the Ministry of Agriculture and Farmers' Welfare. But this dependency has been on a downward trajectory. Per the ministry, import dependency of pulses came down from 19 per cent in 2013-14 to around nine per cent in 2021-22; and is projected to drop further to around per cent by 2030-31.

The Centre has also been pushing pulse production to achieve self-sufficiency. Union Minister of Agriculture Shivraj Singh Chouhan called a meeting on June 21, where he highlighted the necessity of increasing pulse production in the country to reduce imports.