India-Canada trade ties at risk if PM Trudeau does not stop making false accusations over Nijjar's killing: Former Indian Ambassador

More than a year-long simmering diplomatic dispute between India and Canada over the killing of Sikh separatist Hardeep Singh Nijjar, which recently escalated further, leading to both nations expelling diplomats, may adversely impact a thriving bilateral trade relationship valued at $100 billion, including $70 billion of Canadian portfolio investment into India in recent years.

Pertinently, over 600 Canadian companies and organizations have established a presence in India. As of September 2023, Canada is the 17th largest foreign investor in India, with investments totaling $3.6 billion since 2000.

Anil Trigunayat, former Indian Ambassador to Jordan, Libya, and Malta in an exclusive chat with Education Post said that if Canada did not stop false accusations and escalate the matter further, it may even impact the thriving trade relations between the two nations, apart from further worsening the diplomatic ties.

“Well, the repercussion of this false bravado on the part of Prime Minister Justin Trudeau is that the relationship today has hit rock bottom. We understand that Trudeau is trying to extract political mileage and benefits from this. And that is precisely the case. But, India is not a banana republic and they can't take India for granted,” he said.

“Canada should not forget at least 600 Canadian companies are operating in India. There is a well-established bilateral trade with them. But they are also working in the Indo-Pacific. So, what India can do is, if it really escalates further, then India will have to work in certain organizations, where they are participating to try to de-escalate, put some sense into them.” he added.

According to Trigunayat, now the repercussions depend on which way the Canadians want to take it.

“They have stakes in India, we too have. A lot of their companies have invested billions of dollars in India. India has always asked Canadian authorities to share whatever evidence they have if it is credible, and verifiable independently. Only then it can hold for India to take action,” he said.

“India has always agreed to cooperate but Canada continues to make baseless accusations and has failed to provide credible evidence to back its claims. In the first place, they should be fighting terrorism, separatism, and extremism on their own territory, which they are not doing,” he added.

Notably, Canadian investments are concentrated in sectors like IT, banking, and financial services. Canadian public funds are also major investors in India's infrastructure, including real estate, roads, and highways.

In 2022, bilateral trade between India and Canada reached $8.2 billion in goods and $6.6 billion in services, a 25% increase from 2021.

Responding to a question, Trigunayat said that Canada has been involved in these kinds of extrajudicial killings all over the world. “They have bombed countries like Libya, Iraq, Afghanistan, without any evidence, and manufactured evidence also sometimes. They could do so to those countries, but they should know India is very different,” he said.

“India to protect our sovereignty and territorial integrity and we have to fight separatism at all costs. But they blame others for their actions only for their vested interests. India i=until recently considered Canada a good partner,” he added.

Trigunayat said that India should also keep an eye on Canadian general elections next year.

“I think India has to see what kind of a political change federal elections in Canada bring about. Because we know that this all is personal to Mr. Trudeau,” he added. The 45th Canadian federal election will take place on or before Oct 20, 2025, to elect members of the House of Commons to the 45th Canadian Parliament.

Canada and India began negotiations on a Comprehensive Economic Partnership Agreement (CEPA) in 2010, and a second round of negotiations on a free trade agreement began in June 2022. However, soaring diplomatic tensions have impacted negotiations and may mean the deal is no longer on the table.

Relations between New Delhi and Ottawa hit new lows last year after the Canadian government said it was investigating a link between Indian government agents and the killing of a Sikh leader, Nijjar, on Canada’s west coast.

To make matters worse, Prime Minister Trudeau recently told reporters that the federal Royal Canadian Mounted Police (RCMP) uncovered “clear and compelling evidence” that Indian government agents have engaged, and continue to engage, in activities that threaten public safety.

Ministry of External Affairs has repeatedly ridiculed the allegations of any involvement in Nijjar’s killing, reiterating that it again “strongly” rejects the “preposterous imputations” from Canada and ordered the withdrawal of its diplomats and other officials from the country.

Nijjar supported a Sikh homeland in the form of an independent Khalistani state and was designated by India as a “terrorist” in July 2020. India has maintained that it had no part to play in killing him, challenging Canada to share evidence to back its claim.