How will Canada react to Narendra Modi’s re-election?

FILE: The Prime Minister of India, Shri Narendra Modi with the Prime Minister of Canada, Mr. Justin Trudeau, at Hyderabad House, in New Delhi on February 23, 2018. (File photo by Prime Minister’s Office (GODL-India), GODL -India /Wikimedia Commons)

(French version available ici)

On May 3, 2024, three people were arrested in connection with the June 2023 murder of Sikh leader Hardeep Singh Nijjar in British Columbia. Last September, Prime Minister Justin Trudeau accused the Indian government of involvement in the murder. the story of the cooling relations between Canada and India.

India is in the middle of elections. In the largest democracy in the world, hundreds of millions of voters have been exercising their right to vote since April 19. The last day of voting is June 1. Bharatiya Janata Party (BJP), which won two consecutive majority mandates in 2014 and 2019, is looking for a third.

The outcome of the election is not really in doubt. The opposition has regrouped around the INDIA coalition, led by the Congress Party – which dominated Indian politics until 2014. But it has failed to provide a viable alternative to Narendra Modi’s party.

How will Canada position itself after these elections?

Historical tensions

The Sikh diaspora represents approximately 2 percent of Canada’s population, or nearly 800,000 Canadians. It is also the largest Sikh community outside India, which partly explains the tense relations between the two countries. The Sikh diaspora is deeply involved in a separatist movement, as evidenced by the organization of an unofficial referendum in Canada and other countries for the creation of Khalistan, a Sikh-majority state in the region that includes India’s Punjab.

India accuses Canada of doing nothing to restrict the activities of the movement, many of whose members are considered terrorists by Delhi. Modi’s government views the granting of Canadian citizenship to Sikh separatist leaders, and Ottawa’s inaction, as a form of interference in its internal affairs.

Modi’s BJP is a Hindu nationalist party with an audience Hinduva philosophy: to make India a Hindu state by restricting the rights of minorities, be they Sikhs, Muslims, Christians or others. Since 2014, the central government and those of other BJP-led states have passed rules that discriminate against religious minorities, including the Dual Citizenship Act or the law restricting interfaith marriage between Hindus and Muslims.

This ‘Hinduised’ view of India partly explains why the government attaches so much importance to the Sikh separatist movement, which is supported by the diaspora.

The separatist movement had been less visible since the 1990s, but the coming of the BJP to power has helped revive it. This situation is at the heart of the diplomatic tensions between Canada and India and has direct consequences for their economic relations.

Moreover, the Modi government is engaging in double-speak in developing its foreign and domestic policies. Within its borders, it uses the narrative that the Hindu nation must be protected from any move that undermines the unity of the country. In the current electoral context, Modi is using his tense relationship with Canada as an example to strengthen nationalist sentiment. By talking about ethno-religious tensions and pushing Hindu nationalist discourse, he can divert attention from more pressing issues, such as the state of human development in the country.

While the unemployment rate was about 6.6 percent in early 2024, it now stands at 44 percent among 20-to-24-year-olds and 14 percent among 25-to-29-year-olds. In the World Press Freedom Index 2024, India ranks 159th out of 180 countries. In terms of the Human Development Index, three in every hundred babies born in 2022 will die before their fifth birthday.

Beyond its borders, the Indian government prides itself on being the world’s largest democracy, thanks to the scale of its electoral process. But India’s democracy is in serious decline, with increasing communal violence, information control through attacks on freedom of association and the press, weakening of the opposition and concentration of wealth in the hands of a few conglomerates close to Modi.

It is therefore not surprising that some analysts speak of a “facade pluralism”, an “authoritarian drift”, a descent towards a “competitive-authoritarian” system, or even the death of Indian democracy.

Canada has the most to lose

Since 2010, India and Canada had been negotiating the adoption of a Comprehensive Economic Partnership Agreement. An initial hiatus took place from 2017 to 2022, but the Canadian government’s accusations against Delhi in September 2023 ended the talks. For now, there are no indications that negotiations will resume anytime soon, although India’s High Commissioner to Canada, Sanjav Kumar Verma, recently stated in Montreal that he was not concerned about economic ties between the two countries.

It is important to note that Canada has the most to lose if trade with India were to stop. Besides the fact that the value of bilateral trade between the two countries represents more to the Canadian economy, it is the content of the imports and exports that is revealing.

Historically, the countries of the Global South, previously called the periphery, sold mainly raw materials, those of the “semi-periphery” manufactured goods, and those of the “center”, more industrialized, high-tech goods. In the case of India and Canada, the opposite is true.

Canadian exports to India consist mainly of bitumen from the oil sands, metallurgical coal, lentils and unrefined diamonds. On the Indian side, three of the top five exports to Canada, in addition to shrimp and basmati rice, consist of pharmaceuticals, rail cars and smartphones. Canada also has more small and medium Canadian businesses in India than India has small and medium businesses here.

Although India is Canada’s tenth largest economic partner, our country is not even among the top 25 Indian partners. It trades more with Southeast Asian countries, the European Union, the United States, China, the United Arab Emirates and Saudi Arabia.

That said, both countries show the intention to benefit from each other. On the one hand, to achieve its economic growth goals, India must invest massively in infrastructure construction, which is very attractive for several Canadian industries, such as the timber sector.

On the other hand, India must protect lentil imports, which are essential to feed the population (Canada supplies lentils when climate risks damage Indian harvests). Furthermore, Canada could position itself favorably as an economic partner in India’s energy transition, especially in the areas of renewable energy sources, such as solar, and clean technologies. From an economic point of view, the tense political relations between the two countries do not benefit either of them.

How will Canada position itself after the election?

The Indian market, which will become the fourth largest in the world by 2025, represents an economic opportunity for Canada. But can and should we develop trade relations with this country while ignoring the state of democracy? The Canadian government will have to ask itself what kind of relationship it wants with India. Ottawa’s allegations about Delhi’s involvement in the death of Hardeep Singh Nijjar have opened a Pandora’s box of questions about the role the country can and will play in influencing the Modi government’s authoritarian trajectory.

One thing is certain: Ottawa will not be able to ignore the Indian political context, given the weight of the Indian diaspora in Canada, both Hindu and Sikh.

Since last fall, Canada has seen a significant increase in the number of asylum seekers from India. If the BJP’s re-election over the past decade is anything to go by, this trend is likely to be accentuated as the majority of asylum applications from India are related to religious persecution. Although the number is marginal compared to the total number of asylum seekers, Canada is increasingly accepting asylum seekers, demonstrating that it is gradually recognizing the context of violence in Modi’s India.

Since the economic relationship between the two countries is more important for Canada, it will be difficult for the country to impose anything on India, which is increasingly attracting the attention of others for the development of economic partnerships. That said, levers do exist in the energy and food sectors.

Canada has a responsibility to engage in serious discussions with India, but it must consider how it plans to use bilateral and multilateral channels to influence Modi’s party and India’s democratic trajectory. It remains to be seen whether Ottawa will position itself as a defender of democracy by questioning who and how it decides to do business with. Finding a diplomatic way to prevent India from sliding into authoritarianism would be a good way to regain our lost diplomatic luster and present ourselves as a positive leader during geopolitical turmoil.

This article first appeared on Policy Options and is republished here under a Creative Commons license.