Canadian diplomats Marie Josee Charbonneau and Rosaline Kwan

In recent years, bilateral trade between Canada and India has not grown as expected. To make sense of what’s playing spoilsport and to understand thoughts in the Canadian camp on the prevailing issue, The Dollar Business sat down with two of Canada’s senior diplomats in India – Marie Josee Charbonneau and Rosaline Kwan.

Neha Dewan | @TheDollarBiz 

TDB: In the four years leading to FY2014, Canada accounted for under 0.7% of India’s merchandise exports and imports. The $3 billion mark has never been breached in either exports or imports. Where lies the concern?

Rosaline Kwan (RK): Let’s focus on the trend. Not absolute numbers. Since 2010, trade between India and Canada has been growing at a CAGR of 30%. That’s promising. Even at a micro level, activity is increasing. I am sure, trade numbers will look much better in future.

TDB: But do you not agree that trade between Canada and India is lower than what it could potentially be?

Marie Josee Charbonneau (MJ): I don’t think so. Maybe I can start with the Comprehensive Economic Partnership Agreement (CEPA). We have completed eight rounds of negotiations and there are two or three chapters that are still under negotiations. We need to build a framework so that Canadian exporters to India and Indian exporters to Canada feel they have that safety net. So, I think there are no real worries – all we need is work on to build that framework.

RK: Just to reinforce the point of having a framework for bilateral trade, Canada is very keen to work with the new government in India. And I am sure, trade between the two countries will grow exponentially in the near term.

A view of the container terminal at Vancouver Port, Canada during sunset. Port Metro Vancouver is Canada’s largest and most diversified port

TDB: A study by the Canada-India Business Council stated that CEPA will give Canadian goods and services the opportunity to have improved access to India’s market and boost Canadian economy. At the same time, for India, the dividends will be high. How will CEPA impact export communities at both ends?

RK: Agreements and frameworks always offer something for both sides. 85-90% of Canada’s economy is driven by small or medium-sized businesses. So, we are perfectly in sync with the needs of Indian exporters. We are consistently in touch with CII and FIEO and trying to incorporate as much of their inputs in CEPA as possible. We are currently undertaking a special programme called the Canadian Technology Accelerator, focusing on micro-sized startups with good technology. I am sure it will add a lot of value to our bilateral trade.

TDB: Canada’s low investments in India’s industries like food processing, energy and education are questioned. What about Canadian investment in India, particularly since the new Indian government is pro-FDI and given Canada’s engagement with Gujarat in the past?

MJ: In Canada, we have more than a million Indo-Canadians. There are lots of people-to-people links. Many Indo-Canadians come from Gujarat. So, it was natural to engage with Gujarat. Canada has built really good relations with the state and we are now looking to take that relationship to the national level. In terms of investments, the future is very promising. Where we, as government representatives can help, is build the environment for Canadian investors to come here and feel at home and have a good sense of how the legal system works and how investments will be protected.

RK: Some of our biggest companies have invested heavily in manufacturing plants in India. Companies like Bombardier and McCain are already here in a big way. When it comes to pension funds, we are talking about a different level of investment – with Shapoorji Pallonji, the partnership was worth $350 million, with Piramal it was worth $500 million.

TDB: Which sectors will drive India-Canada trade going forward?

MJ: Canada has a lot to offer when it comes to education. There are a lot of very good Canadian engineering firms – this makes infrastructure a focus area, as well. Food security is one area where we focus a lot. Canada accounts for 1/3rd of India’s peas, lentils and chickpeas market. There is also a lot of scope for other agricultural exports from Canada to India. On the energy side, we produce lots of oil from oil sands – something that we are now looking forward to export to India.

RK: Canada and India also have a separate framework for energy dialogue. Indian Oil Corporation recently buying a 10% stake in Petronas is a classic example of how a relationship can move in the energy sector. An Indian delegation also visited the Global Petroleum show in Canada recently. ONGC Videsh Limited (OVL) has an office in Calgary. So, the energy sector has a lot to offer.

TDB: Besides exports of articles of iron and steel, organic chemicals, and pharmaceutical products, which other products in the manufacturing sector hold maximum attractiveness in the Canadian market for Indian exporters?

RK: There is a lot of interest in apparel and precious stones – sectors that are inherent to India. Where we think there is a lot of potential, is IT. That’s an area where I think trade can improve a lot, particularly in terms of back-end support for Canadian financial services firms.

TDB: Are there exclusive products or services that Canada can offer?

RK: When you look at the numbers, there is obviously a lot of interest in machinery and aerospace parts from Canada. Then you have solar technology and lumber. I do believe more and more builders will use wood in the future and I am sure a lot of it will be Canadian.

TDB: There’s not a lot of talk around Canadian tourism. Why doesn’t Canada promote itself much in that sense?

MJ: The Canadian Tourism Commission is represented here in New Delhi. We will pass on your message that they should expand their presence. We do want to attract more Indian tourists to Canada and, I think, the trend of Indians visiting Canada is on the rise. My immigration colleagues have their hands full and every year we are issuing more and more number of visas. Moreover, with a lot of Indians having friends and relatives in Canada, the numbers are only going to rise going forward.

RK: A lot more can actually be done when it comes to tourism. Last year, a group of Canadian tourist operators visited Jaipur and I am sure a lot of promotional activities are being planned to attract more tourists from India.

TDB: You seem more upbeat about India as a service provider than a manufacturer. Is that so?

RK: Although India has shown very strong capabilities in the services area, we understand that manufacturing is critical, particularly when it comes to creating jobs. Our perception is that there will be an increased focus in India to create jobs on the manufacturing side going forward. And Canada should be a participant in this respect.

TDB: In India, there is not a lot of traction when it comes to high-tech industries. Should India begin focussing on high-tech manufacturing?

RK: We have been hearing a lot from the government about framing policies that will encourage electronics manufacturing in India. My understanding and perception is that it’s already taking place and we have also been communicated about it. In fact, we have communicated this message back to Canadian companies so that while taking decisions they don’t ignore India.

MJ: I think such policies should also give a clear signal to foreign investors. The message that should go out is that India is ready for business. Once an investor understands the kind of environment he/she will be operating in, taking decisions and putting in those big bucks become easy.