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India-Canada Diplomatic Dispute Unlikely to Deter Robust Investment Relations

India-Canada Diplomatic Dispute Unlikely to Deter Robust Investment Relations

 Diplomatic tensions

Diplomatic Between India and Canada are unlikely to immediately impact their investment relations, according to a senior government official. Despite the dispute, Canadian pension funds are reaping substantial returns from their investments in India, particularly in the country’s infrastructure sector.

The official explained that these pension funds are to invest in India because they are achieving higher returns compared to other locations. Given the financial benefits, there doesn’t appear to be any compelling reason for them to investments due to the current diplomatic situation. The official stated, “I don’t see any impact on Canadian investments into India.”

Conversely

there doesn’t seem to be an immediate impact on Indian investments in Canada either. This assessment comes in the midst of heightened diplomatic tensions  from Canadian Prime Minister Justin Trudeau’s allegations of potential  by Indian agents in the killing of a Khalistan separatist in June. India has vehemently denied these allegations.

As a response to the diplomatic tensions, India recently “suspended until further notice” its visa services in Canada. However, this move does not seem to have affected investment decisions.

A report by the think tank GTRI reveals that Canadian pension funds had  over USD 45 billion in India by the end of 2022, making it the of Canadian foreign direct investment (FDI) globally. These investments primarily focus on sectors such as infrastructure, energy, technology, and financial services.

GTRI predicts

that Canadian pension funds will continue  in India due to the country’s large market size and the promising returns on investment. Despite the diplomatic row, economic interests appear to be guiding the investment decisions of these funds.

In conclusion, while the tensions between India and Canada have made headlines, the investment landscape between the two nations remains resilient. The substantial returns and growth  in India’s key sectors seem to be outweighing the current diplomatic discord, reinforcing the importance of economic ties in international relations.

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