With an aging population and severe labor shortages looming, Canada is seeking a bigger share of India's booming economy and human capital. And in the process, Canada may be defining its strategic foreign policy interests in Asia.
With a foreign investment protection agreement concluded last summer and a free-trade agreement with India in the works, momentum to do business with India is increasing.
Prime Minister Stephen Harper's recent inaugural address at the Canada India Foundation in Toronto may be heralding a return to the pre-1960s golden years of relations between Canada and India.
Harper announced two new trade offices in Hyderabad and Kolkata as well as additional commissioners at established offices in Mumbai and Delhi.
"These new trade offices will expand Canada's reach in India beyond our traditional focus on the north. India's boom is not just happening in the northern region, and Canada needs to be where all the action is," Harper said.
In a speech that lasted almost 25 minutes, Harper said the two countries have a "shared heritage" that includes similar parliamentary democracies, federal systems and the use of the English language.
India is succeeding, said Harper, because "pluralism is at the heart…of the concept of a free and democratic society," and understands the benefits of a free market economy.
"Free people and free markets are ultimately inseparable," he said.
In the context of reports of China's ongoing crackdown in Tibet, turmoil in Burma and Pakistan, and strained China/Canada relations since Harper took office, the implicit message to totalitarian regimes was clear.
R.L. Narayan, High Commissioner for India in Canada, told The Epoch Times that the relationship between the two countries is "a perfect fit. Our bi-lateral fundamentals are very strong on both sides."
The Harper government, he says, "has articulated a clear priority for India on numerous occasions," and followed that with several high profile ministerial visits to India.
Ian Lee, director of the MBA program at Carleton University's Sprott School of Business says that for a long time at a policy level, Canada practically ignored India.
However, the situation is being rectified and India is now "an oasis of stability," with a compound growth rate of 8 – 9 per cent GDP. And with the scrapping of past protectionist policies, opportunities are opening up.
While Canada's relationship with China, which has a growth rate of 10 per cent, is very important and cannot be ignored, the two countries are very different "in every sense of the word," says Lee.
China, with strong aspirations for a super power status "is increasingly running into very rough waters…and attracting international scrutiny," he says.
"All political parties are realizing that a relationship with China is problematic on quite a few levels."
China's involvement with the Sudanese government as well as human rights abuses in Tibet and within China, including the harvesting of prisoners' organs, is attracting widespread criticism, says Lee.
"Therefore Canada cannot adopt a policy of unquestioning support with China."
In recent years both Canada and the United States have been responding to changes in the global political and economic realities, he says. The United States is India's largest trading partner.
"Increasingly India has been recognized as the ally and partner by both the U.S. and Canada."
As a democratic country, India has evolved mechanisms in civil society that are much more adept in addressing and facilitating change. India is not politically risky and future governments are increasingly going to tilt towards it, says Lee.
In contrast, China has kept "a ruthless and rigid lid on change and economic and demographic differences and cleavages are suppressed. Sooner or later it's going to explode."
China's focus on manufacturing cheap goods will also be problematic in the future because environmental and global warming issues are putting pressure on people to reduce consumption and conserve energy.
India on the other hand has focused on services such as call centers, and such services are renewable, Lee says.
Elliot Tepper, professor of political science specializing in Asian studies at Carleton University, says that while it is impossible to ignore China with its 10 per cent growth rate, it is clear that Canada has decided to pay more attention to India.
"[However], China and India are morphing beyond our previous vision of what the status quo was. How Canada fits in this dynamic and rapidly changing tense regional situation probably requires a month-to-month reckoning."
In the long haul, Tepper says that as a democratic system, India is better prepared for shocks.
Canada's relationship with India hinges on a variety of things, one of which is "taking the nuclear issue off the table," adds Tepper. Canada/India relations have been frosty over the mid-1970s and 1998 nuclear tests.
Narayan says that since the beginning of the 1990s and economic liberalization, concerns regarding Indian bureaucracy, corruption and infrastructure have dissipated. An example is Montreal–based Bombardier, which won a 20-year contract to build underground metro cars in New Delhi and other regions in July 2007.
India needs Canada's expertise in automobiles and cutting edge communications technology, says Narayan. "We're adding five to eight million mobile phones every month."
In his talk at the Canada India Foundation, Harper reminded the South Asian business community that they need to be represented in Ottawa and that his government is speeding up immigration reforms to get skilled workers into the country faster.
After China, India is the second largest source of immigrants to Canada. There are an estimated one million Canadians of South Asian heritage living in Canada.
India ranks only the 14th largest export market for Canada, while Canada is India's 24th largest export market.
"That leaves a lot of room for improvement," said Harper.
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