India-Canada Relations: A New Low Amid Diplomatic Crisis – Analysis

The diplomatic relationship between India and Canada has reached an unprecedented low, largely due to Canada’s recent allegations regarding the assassination of Khalistani separatist Hardeep Singh Nijjar.

Canadian Prime Minister Justin Trudeau, without providing substantial evidence, accused Indian diplomats of involvement in Nijjar’s murder an accusation India has consistently denied. This controversy has brought long-simmering tensions to the forefront, particularly Canada’s perceived role as a sanctuary for Khalistani separatists, and threatens to inflict lasting damage on bilateral relations.

Canada as a Sanctuary for Khalistani Extremists

For decades, Canada has been a hub for pro-Khalistani individuals and organizations, even as the movement to create a separate Sikh state, Khalistan, has lost ground in India. Canadian soil has been used to organize anti-India protests, raise funds for separatist causes, and orchestrate violent acts targeting Indian diplomatic missions. Despite the threat this poses to India’s sovereignty, Canadian authorities have often been accused of turning a blind eye to these activities. One egregious example was the public celebration in Canada of the assassination of former Indian Prime Minister Indira Gandhi. Floats depicting her murder paraded through Canadian streets, an offensive act that triggered outrage in India. Vandalism of Indian diplomatic missions and the burning of Indian flags have only fueled further tensions between the two nations.

Canada’s reluctance to take strong action against these extremist elements, often justified in the name of free speech, has drawn criticism. Under Trudeau’s leadership, this issue has become more pronounced, with accusations that his administration’s leniency toward Khalistani separatists is driven by electoral considerations, as the Sikh community represents a significant voter base in key constituencies.

Air India Bombing: A Historical Tragedy

The strained ties over Khalistani extremism have a tragic history. The 1985 bombing of Air India Flight 182, or the Kanishka bombing, remains one of the deadliest terror attacks involving Canadians, killing 329 people, including 268 Canadian citizens. The attack was masterminded on Canadian soil by Khalistani terrorists. Canada’s mishandling of the investigation and prosecution of those responsible has long been criticized by both India and the Canadian Sikh community. The event serves as a stark reminder of the consequences of failing to address extremist activities, not only for India but also for Canadian citizens.

Trudeau’s Allegations and Political Motives

Trudeau’s recent allegations seem tied not just to the Nijjar case, but to a broader political strategy. His administration has been embroiled in controversy over alleged Chinese interference in Canadian politics, which has put his government under intense scrutiny. Some critics argue that by shifting attention to India with these unsubstantiated allegations, Trudeau is attempting to divert attention away from his own domestic political crisis, particularly the growing concerns over Chinese influence. Furthermore, Trudeau’s reliance on the political support of Sikh and Khalistani groups in Canada is evident. His accusations against India could be part of an electoral strategy aimed at securing the backing of this key voter base ahead of upcoming elections, raising concerns that domestic political interests are influencing Canada’s foreign policy decisions.

BRICS and Geopolitical Maneuvering

Another factor behind the timing of Trudeau’s allegations could be related to the upcoming BRICS meeting in Kazan, Russia. The BRICS nations Brazil, Russia, India, China, and South Africa are expected to discuss the introduction of a new currency for international trade, which could serve as a substitute for the U.S. dollar. Given that BRICS countries account for nearly 60% of global trade, the adoption of a new currency could significantly undermine the dollar’s hegemony, posing a major challenge to U.S. economic dominance. As India plays a pivotal role within BRICS, the diplomatic row with Canada could be seen as part of a broader geopolitical game, with Western powers potentially uneasy about India’s growing influence in this bloc.

Foreign Influence in India’s Farmer Protests

Adding to the complexity, India has also raised concerns over foreign-backed interference in its domestic affairs, particularly during the severe farmers’ protests in recent years. Evidence has emerged that international players, especially Khalistani-backed groups in Canada, provided funding and support for the protests. While these demonstrations were framed as defending farmers’ rights, India views them as part of a broader strategy to destabilize the government and push for regime change, similar to movements seen in Bangladesh and Pakistan. The nexus between foreign influence and internal unrest is a growing concern for India, and Canada’s failure to curb Khalistani separatist funding is viewed as part of this larger pattern.

India’s Strong Response

India has not taken these accusations lightly. After more than a year of asking Canada for evidence and receiving none, India took decisive action. The Canadian High Commissioner was ordered to leave the country, and India recalled its diplomats from Canada, signaling its firm stance in defending national integrity. India’s actions reflect its deep frustration over what it perceives as baseless allegations and Canada’s inability to curb extremist activities that threaten India’s sovereignty. India has consistently called on Canada to act against Khalistani groups, arguing that these extremists jeopardize not only India’s security but also the long-term Indo-Canadian relationship. However, Canada’s reluctance to address these activities has pushed bilateral relations to the brink.

Impact on Indian Communities in Canada

The current diplomatic crisis could have significant consequences for the large Indian diaspora living in Canada, as well as for the bilateral economic relationship. Indian immigrants and students form a substantial part of Canada’s economy and workforce. Over 200,000 Indian students are currently studying in Canada, contributing billions of dollars to the country’s educational sector. The Indian community has also made significant contributions to Canada’s development, especially in sectors such as information technology, healthcare, and engineering.

However, the ongoing tensions could affect immigration policies, trade, and educational exchanges between the two nations. Canada relies heavily on skilled Indian workers, and any disruption in the flow of Indian professionals could impact its economy. Furthermore, Indian students, a major source of revenue for Canadian universities, may reconsider their plans if diplomatic relations continue to deteriorate.

The Implications of ongoing Standoff

Trade between India and Canada is likely to suffer significantly due to the ongoing diplomatic tensions, with potential consequences for key sectors and businesses in both countries.

1. Disruption in Bilateral Trade: India and Canada have a robust trade relationship, with bilateral trade in goods and services amounting to approximately USD 11 billion in recent years. However, with the diplomatic standoff, negotiations for trade agreements such as the proposed Comprehensive Economic Partnership Agreement (CEPA) and the Foreign Investment Promotion and Protection Agreement (FIPA) could be stalled indefinitely. This would limit opportunities for growth in trade and investment, preventing both nations from capitalizing on expanding markets and economic cooperation.

2. Impact on Agricultural Exports: Canada is a major exporter of agricultural products to India, particularly pulses, which are a staple in Indian diets. Any deterioration in relations could lead to disruptions in these agricultural imports, affecting Canadian farmers who depend heavily on the Indian market. India might also seek alternative sources for these imports, leading to a loss of a significant export market for Canada.

3. Effect on Indian IT and Service Sectors: Indian IT and service companies have a strong presence in Canada, contributing to Canadian businesses by providing cost-effective services in software development, IT solutions, and customer support. Tensions between the governments could lead to increased restrictions on Indian companies operating in Canada or delays in business visas for Indian professionals. This would hurt the Canadian technology sector, which relies heavily on Indian expertise, and may force Canadian businesses to look for less efficient alternatives.

4. Diminished Opportunities for Canadian Companies in India: Canadian companies operating in India, particularly in sectors such as energy, infrastructure, education, and mining, might face increased scrutiny and potential barriers in securing government contracts or expanding their business operations. With India’s rapid economic growth and large consumer base, Canadian firms stand to lose significant business opportunities if relations sour further.

5. Tourism and Hospitality Industry: India is a growing market for Canada’s tourism industry, with thousands of Indians visiting Canada every year for leisure, business, and education purposes. The ongoing tensions could reduce tourism from India as both governments may tighten visa policies. Similarly, Canadians visiting India for tourism or business may also face difficulties, which would hurt the hospitality sectors in both nations.

6. Impact on Investment Flows: India and Canada have mutual investments in key industries. Canadian pension funds, for example, have invested billions of dollars in Indian infrastructure, real estate, and renewable energy projects. Likewise, Indian companies have invested in Canada, particularly in sectors like IT, pharmaceuticals, and manufacturing. The deteriorating relationship could lead to reduced investment flows and stymie future collaborations between businesses and industries in both countries.

7. Indian Student Influx and Canadian Education Sector: A major source of income for Canadian universities is the tuition fees paid by international students, and Indian students make up a significant proportion of the international student body in Canada. Diplomatic fallout could make Indian students wary of pursuing education in Canada, leading to a decline in enrollments. This would financially hurt Canadian universities and local economies in cities where these students live and spend. In response, India could encourage its students to explore educational opportunities in other countries, such as the U.S., U.K., or Australia.

Tough Time ahead for Immigration

The ongoing diplomatic tensions between India and Canada are likely to impact immigration, with potential consequences for both Indian immigrants in Canada and future migration flows.

1. Stricter Visa Policies: The diplomatic standoff could lead to more stringent visa policies on both sides. Canada might tighten its visa approval process for Indian nationals, making it harder for students, skilled workers, and family members to immigrate. Conversely, India might also impose restrictions on visa approvals for Canadians or slow down the processing of visas for Canadian nationals and business professionals. These measures could disrupt the free flow of people between the two countries, significantly impacting families, businesses, and students.

2. Impact on Indian Students: Canada is a top destination for Indian students, with over 200,000 Indian students enrolled in Canadian institutions. These students contribute significantly to Canada’s education sector and local economies. However, heightened tensions could discourage future students from applying to Canadian universities. If India issues travel advisories or discourages its citizens from studying in Canada due to safety concerns or diplomatic tensions, this could lead to a sharp decline in student enrollments. Indian students may start looking for alternative education destinations like the U.S., U.K., or Australia.

3. Work Permits and Skilled Immigration: Canada relies heavily on skilled immigrants, particularly from India, to fill labor shortages in various industries like technology, healthcare, and engineering. The ongoing diplomatic crisis could delay the processing of work permits, permanent residency (PR) applications, and other immigration-related paperwork for Indian professionals. Express Entry programs, which are often used by Indian IT professionals and other skilled workers to migrate to Canada, could see delays, causing frustration and uncertainty for thousands of applicants.

A slowdown in skilled immigration from India could hurt Canada’s economy, particularly industries that rely on highly qualified Indian workers, such as the tech and IT sectors. At the same time, India might discourage professionals from seeking jobs in Canada, leading to a talent drain from Canada’s workforce.

4. Family Reunification Programs: Indian immigrants form one of the largest communities in Canada, and family reunification is a key part of Canadian immigration policy. With the diplomatic crisis, the processing of family reunification applications could face delays or even restrictions. This would directly impact Indian families seeking to reunite with their relatives in Canada, causing emotional stress and difficulties.

5. Potential Backlash Against Indian Immigrants: In times of political tensions, there is always a risk of heightened xenophobia or backlash against immigrant communities. While Canada has a strong history of multiculturalism, any escalation in tensions could potentially fuel anti-immigrant sentiment, particularly against Indian Canadians. Public perceptions may shift, and Indian immigrants could face social or political challenges as a result.

6. Indian Diaspora Concerns: Canada is home to a large Indian diaspora, including over 1.8 million Indo-Canadians. If relations continue to worsen, these individuals may face difficulties in maintaining their ties to India, including travel restrictions or complications with property ownership or legal matters back home. Additionally, Indian nationals in Canada may feel less secure about their status or future in the country, given the ongoing political tensions.

7. Canada’s Immigration Revenue and Demographic Needs: Canada’s economy and population growth heavily depend on immigration, and Indian immigrants play a crucial role in meeting labor shortages, particularly in sectors like healthcare, IT, and construction. Any drop in Indian immigration could exacerbate Canada’s labor shortages, especially as the country seeks to recover from the economic impacts of the COVID-19 pandemic.

Furthermore, Indian students contribute billions of dollars to Canada’s economy through tuition fees and living expenses. If Indian immigration decreases due to the diplomatic row, it could significantly impact Canada’s revenues from international education and its ability to attract top talent to its workforce.

The Path Forward

Tensions between India and Canada can be mitigated through diplomatic engagement, mutual concessions, and focusing on long-term interests. Key steps to de-escalate the situation include:

1. High-Level Diplomatic Dialogue: Direct, high-level talks are essential to defuse tensions. Both nations should engage in formal or backchannel diplomacy to privately address the allegations, evidence, and concerns. A meeting between senior officials, such as foreign ministers or national security advisers, could help clarify positions and create a path forward.

Objective Mediation: If needed, a neutral third party like the United Nations or an allied nation could mediate, providing a fair environment for discussion.

2. Evidentiary Exchange and Transparency: Canada’s accusations regarding the involvement of Indian diplomats in Hardeep Singh Nijjar’s assassination have heightened tensions. Canada should provide any concrete evidence through international legal frameworks, allowing India to respond transparently. If allegations hold merit, India could cooperate diplomatically to address concerns. Otherwise, Canada may need to reconsider its stance and publicly repair the damage.

3. Counterterrorism Cooperation: India has long-standing concerns over Khalistani separatism operating from Canadian soil. Both nations could collaborate on counterterrorism by sharing intelligence and curbing violent activities. Joint efforts would foster trust and address mutual security concerns while reducing suspicions on both sides.

4. Reaffirming Sovereignty and Respect: A joint statement reaffirming mutual respect for territorial integrity and sovereignty could ease tensions. While Trudeau has publicly supported India’s sovereignty, additional affirmations on Canada’s commitment to address anti-India activities would be welcomed. Likewise, India could diplomatically acknowledge Canada’s legal processes, helping restore a positive atmosphere for dialogue.

5. Acknowledging Domestic Political Pressures: Both countries face domestic political challenges. Trudeau, struggling with allegations of foreign interference and reliant on Sikh voters, faces political challenges ahead of elections. India remains firm on protecting its sovereignty from Khalistani separatism. Recognizing each other’s internal pressures could encourage a more nuanced, sensitive approach to diplomacy and avoid long-term damage to bilateral ties.

6. Economic and Trade Focus: Despite diplomatic tensions, resuming or advancing discussions on trade could offer a way to rebuild relations. Revisiting trade agreements, such as the Comprehensive Economic Partnership Agreement (CEPA), would provide economic incentives for cooperation. Economic interdependence could serve as a deterrent against prolonged diplomatic conflict, as both countries would suffer if ties break down.

7. Engaging the Indian Diaspora: The Indo-Canadian community can act as a bridge between both nations. Prominent figures from the diaspora could promote dialogue and advocate for a peaceful resolution. Their ties to both countries make them valuable intermediaries. Highlighting the positive contributions of Indian immigrants to Canada could shift focus away from negative narratives surrounding the dispute.

8. Reducing Public Rhetoric and Media Sensationalism: Aggressive public rhetoric from both governments has worsened tensions. A more measured, diplomatic tone would create a better environment for negotiations. Reducing sensationalism in the media and focusing on shared interests would help avoid further escalation.

9. Long-Term Strategy on Khalistani Issue: For lasting stability, Canada must address India’s concerns regarding Khalistani separatism. This could include stricter oversight of extremist activities within Canada, ensuring violent actors are held accountable. India, in turn, should encourage distinguishing between peaceful political activism and violent separatism, fostering dialogue with non-violent groups.

Conclusion

The current diplomatic rift between India and Canada represents a low point in their relationship, driven by a complex mix of Khalistani separatism, political pressures, and broader geopolitical dynamics. While allegations surrounding the killing of Hardeep Singh Nijjar have intensified the strain, both nations risk losing significantly if relations continue to worsen. From disrupted trade and immigration to the shared interests of the Indian diaspora, the stakes are high. Rebuilding trust will require diplomatic transparency, respect, and a commitment to addressing security concerns on both sides. Only through open dialogue and constructive engagement can India and Canada restore their historically strong ties.

About the authors:

• Prof. (Dr.) Jagmeet Bawa: Professor and Head, Department of Political Science, Central University of Himachal Pradesh, Dharamshala, India. Dr. Bawa brings with him a rich experience of 15 years in teaching and research. His expertise lies in the domains of Indian Political System and Central Asian Politics. Prior to his current position, he taught for a decade at I K Gujral Punjab Technical University, Jalandhar, India. Throughout his academic journey, he has guided ten students toward the successful completion of their Ph.D. degrees. Additionally, Dr. Bawa’s scholarly contributions extend to the realm of publications, with five books authored and over 30 research papers penned. His pursuit of academic excellence has taken him across various countries, where he has engaged in academic and research activities. Presently, his focus lies on Central Asian Politics, with four students currently pursuing their doctoral degrees under his guidance on this very subject.
• Dr. Sandeep Singh: Assistant Professor, Department of South and Central Asian Studies, School of International Studies, Central University of Punjab, Bathinda, India.
• Dr. Balinder Singh: Research Scholar and Academic. Ph.D. in Political Science, Central University of Himachal Pradesh, Dharamshala, India.