At a time when developing economies have started to reap benefits from open trade and integration with the global ecosystem, the unpredicted shift towards inward-focused policies by developed nations shows emerging signs of a new multipolar world. Despite this shifting global dynamic, India s transformation story and reforms momentum continue to build traction and find support in long-standing natural allies such as the US, the UK, the EU, Japan and others. The time is now and right more than ever for India to invest further in building sustainable relationships with like-minded partners such as Canada, who have always been friendly business and cultural partners.
The bilateral trade between India and Canada has grown over the last few years, but these numbers are not reflective of the potential. There has been a steady increase in the number of Canadian companies operating in India, which currently stands at over 400, compared to 300 a year and a half ago. There is reciprocity in this relationship, with Indian companies too gaining a strong foothold in Canada close to 100 Indian companies operating across Canada s provinces are responsible for over a billion dollars of investment and have a potential to create 5,000 jobs over the next few years.
This is only the tip of the iceberg, and while a large part of the mix is currently small and medium enterprises (SMEs) on both sides, there are also bigger investors such as the Canadian pension funds who have made significant investments by way of equity funds in a relatively short period of time this serves as a validation of the growing investor interest and business confidence between the two countries. With Canada also emerging as a coveted destination for Indian diaspora, at the back of its flagship programme for economic migration, it adds to the growing bonhomie between the two nations.
A winning partnership
While disenchantment with economic globalisation continues to be at an all-time high, both Canada and India are two of the very few countries to have an outward-looking posture on matters relating to trade and investments. Having said that, despite much talk on collaboration and increasing the bilateral trade over the years, there still seems to be ground to cover. There is a need for both the countries to create contours for a sustainable trade negotiation that encompass the fundamentals of economic engagement. Bilateral growth will rest on four factors.
First, leverage on the success in strategic sectors such as infrastructure, agriculture, education and energy. Collaboration in these sectors will not only play a key role in further strengthening the bilateral dynamic, but will also help India become globally competitive.
Second, it s important to realise that SMEs will be the linchpin in this bilateral dynamic and, therefore, there is a need for India to create an investor-friendly ecosystem in order to attract Canadian SMEs.
Third, increase collaboration in emerging sectors such as clean energy, agri-machinery, advanced manufacturing, food processing, clean technology, digital industries, amongst others. These sectors will drive incremental growth in the times to come.
Fourth, cooperation at a subnational level is expected to be a critical factor for economic growth and province-state and city-city collaboration is expected to be the way forward to steer the bilateral economic relationship.
In essence, these two countries dynamics have all the essential ingredients for becoming a force multiplier on the global business and investment landscape; what is required is a continued momentum and rigour for governments on both sides to lead and inspire a transformative change.
The author is leader, Market Enablement, KPMG in India