A diplomatic fight between Canada and India over the murder of a Sikh leader threatens to put a freeze on growing economic ties between the two countries, which are far wider than the flow of goods being shipped across the Pacific.
India is a relatively small buyer of Canadian commodities, but it’s a huge factor in the education sector — it’s by far the largest source of foreign students attending Canada’s colleges and universities. Meanwhile, the biggest Canadian public pension managers have poured tens of billions of dollars into Indian companies and projects, including renewable energy, infrastructure and banks.
Canadian Prime Minister Justin Trudeau shocked the country Monday by alleging that India was behind the murder in June of a Sikh separatist leader in a suburb of Vancouver. India denied that it had anything to do with the killing, calling the allegation “absurd.” Both nations expelled one of the other’s diplomats.The incident exposes a widening rift between two countries that, in financial and economic terms, had been growing closer. Investments between Canada and India rose to C$36.
CPPIB, Canada’s largest pension manager, had $21 billion invested in India as of about a year ago, according to its website. One major investment, a 2.7% stake in Mumbai-headquartered Kotak Mahindra Bank Ltd., is worth 96 billion rupees . It’s one of about 70 publicly traded Indian companies in which the fund has a stake, according to a fund disclosure document.
The fate of future investments could be called into question if the fight between the countries escalates. “If the spat really gets protracted and drags on for months, while Canada continues its investigation, I see that could have a dampening effect at the margin,” Dehejia said.
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