Narendra Modi visit: Why India matters to Canada

For two countries that Prime Minister Stephen Harper calls "natural partners" in a new global economy, Canada and India might appear to share a rather meek business relationship.

Not even one per cent of Canadian exports currently ship to India, with goods exports around $3.1 billion in 2014 — less than one-sixth what Canada exports to China.

Promising to open India to global commerce, Indian Prime Minister Narendra Modi's historic three-day Canadian tour this week seeks to change that.

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His trip ends a 42-year dry spell since a head of state from the world's largest democracy visited to talk bilateral relations.

As Harper pushes for a free-trade pact with Modi, Canadian economists and business leaders representing South Asian professionals lay out their case for why India is a social, political, cultural and economic force that matters.

1. A hot opportunity

"Let's not forget there's a race to get to India's door," says Jaswinder Kaur, director of the Canada-India Centre of Excellence in Ottawa.

"We're competing against Japan, the French, the Australians, and this is an opportunity for Canada to demonstrate how we can contribute and make a true partnership."

Canada's Global Markets Action Plan identified India as a priority market, with a burgeoning economy and roughly 11 million people under 30 entering the workforce each year.

India has for years remained the largest market for Canada's pulses (grain legumes such as lentils and peas), and Canada also supplies lumber and potash.

"But are Canadian companies ready to do business?" Kaur says. "That's where the real work is going to begin."

The International Monetary Fund projects that by 2016, India's GDP growth will outpace that of China's becoming the fastest-growing major economy in the world.

In the meantime, two-way bilateral trade has grown to $6 billion, up 47 per cent since 2010, when trade was around $4.09 billion.

2. Energy demands

Much has been made, Kaur notes, of Modi "shopping for uranium" as part of this Canadian tour.

India needs the radioactive element to feed its nuclear reactors, and Canada has a vast supply.

Mr. Modi will be looking for a signed contract for Canada to be a supplier of uranium, as India desperately needs energy as it expands.- Elliot Tepper, Carleton University South Asian studies professor

If Ottawa allows, Saskatchewan-based Cameco Corp. could resume uranium exports to India following a ban 40 years ago, when India was accused of testing a nuclear weapon in 1974, and then again in 1998, using Candu technology supplied by Canada.

"Since then, our relations have slowly climbed back up to the point where we have a nuclear agreement," said Elliot Tepper, a South Asian studies professor at Carleton University.

"Mr. Modi will be looking for a signed contract for Canada to be a supplier of uranium, as India desperately needs energy as it expands, and wants to rely more on nuclear power."

Meanwhile, Canadian natural gas and oil will continue to be useful resources to India.

3. Young population

The under-35 demographic represents more than 65 per cent of India's population, and many of them are migrating from rural areas to cities searching for education and employment, both of which Canada can help supply.

Modi's "Make in India" initiative is encouraging international firms to set up manufacturing plants in India to spur job creation at home and become a low-cost alternative to China.

Flipping the saying that China will grow old before it grows rich, Gary Comerford, president of the Canadian Indian Business Council, believes "India will grow wealthy before it grows old."

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Over the last decade, he says, a large number of Indians have "pulled themselves out of poverty" and into a rising middle class.

"And that means they're consuming," Comerford says of the next generation of big spenders. "They're getting a fridge, a TV, a cellphone.

"If you take that sheer population of 1.2 billion and convert it into a consuming group, as well as being an economic powerhouse, it will be a political powerhouse as well."

4. Cross-cultural understanding

India remains a democracy with a "remarkably pluralistic society," which Canada can appreciate as a state that welcomes diversity as a foundation of the country, says Tepper.

"That makes our two countries both natural allies and rather special in terms of the states of the world," he says, adding that the two countries have worked together quietly for years on such things as counter-terrorism and sharing concerns about violent extremists.

University of Toronto professor Kanta Murali, who analyzes Indian politics at the Centre for South Asian Studies, points to a 1.2 million-strong Indian diaspora in Canada as "central to the excitement surrounding Modi's visit."

A shared history under British colonial rule, a broadly English-speaking population and a democratic system add to a sense of kinship, adds Comerford.

5. A knowledge economy

According to Dherma Jain, president of the Indo-Canada Chamber of Commerce, more than 15,000 Indian students have decided to pursue foreign studies at universities and colleges in Canada.

Modi's visit is expected to seal some educational co-operation agreements such as twinning programs, Tepper said.

"Canada will be providing expertise that India invites as it wants to upscale its own capacity, from technology to agriculture, and attracting people to come to Canada instead of going elsewhere," he said.

India is interested in harnessing green tech as well, notes Karunakar Papala, chairman of the Indo-Canada Ottawa Business Chamber, which represents some 600 business owners in the capital.

Modi's plan for India to develop 100 high-tech "smart cities" that are more energy and resource efficient, could benefit from Canadian know-how. (The Indian prime minister made a similar pitch when he visited Germany recently.)

"Solar technologies, green technologies, Canada has got a lot to offer there," Papala said.