As Canada’s relationship with India deteriorates politically, an international governance expert suggests it’s still too early to speculate how the fallout could hurt either country’s economy – though the flow of Indian students to Canada could be affected.

On Tuesday, Prime Minister Justin Trudeau alleged the Indian government had a hand in the murder of a Sikh separatist leader living in Canada, a claim Indian leader Narendra Modi subsequently called “absurd.” Both countries have expelled one of the other’s diplomats, trade discussions have halted and India has asked citizens to take caution when travelling to Canada.

Rohinton Medhora, a distinguished fellow at the Centre for International Governance Innovation, said it’s unclear how these latest developments might impact Canada’s economy.

“A lot depends on how each country’s government handles the public relations and strategic side of this,” he told BNN Bloomberg Tuesday.

“At this stage, there’s no sense that there will be retaliation on existing Canadian operations in India or vice versa, but I wouldn’t rule anything out, mainly because this isn’t a strong economic relationship.”

According to the Observatory of Economic Complexity, India represented just 0.62 per cent of Canada’s exports in 2021, while 1.02 per cent of India’s exports ended up in Canada.

“The Canada-India trade relationship is a good one, but it’s not as good as it could be,” Medhora said.

“Neither country wants to make concessions to the other that it would have to make to more important trade partners.”


One area where the Canadian economy could feel the pinch is in academia, Medhora noted, as Canada has issued 997,125 study permits to Indian students since 2015, according to data from Immigration and Refugees and Citizenship Canada.

“There’s no indication that this stream will dry up right away, but to the extent that Indian students were funded by government scholarships and if this crisis becomes worse and the government decides to do something about them and direct them to other countries with very good universities – Australia, the U.K., the U.S. – that too could be an economic consequence of this crisis,” he said.