How will Canada react to Narendra Modi’s reelection?

FILE: The Prime Minister of India, Shri Narendra Modi with the Prime Minister of Canada, Mr. Justin Trudeau, at Hyderabad House, in New Delhi on February 23, 2018. (File Photo By Prime Minister’s Office (GODL-India), GODL-India/Wikimedia Commons)

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On May 3, 2024, three people were arrested in connection with the murder of Sikh leader Hardeep Singh Nijjar in British Columbia in June 2023. Last September, Prime Minister Justin Trudeau accused the Indian government of involvement in the assassination, marking a new chapter in the saga of cooling relations between Canada and India.

India is in the midst of an election. In the world’s largest democracy, hundreds of millions of voters have been exercising their right to vote since April 19. The final voting day is June 1. The Bharatiya Janata Party (BJP), which won two consecutive majority mandates in 2014 and 2019, is seeking a third one.

The outcome of the election is not really in doubt. The opposition has regrouped around the I.N.D.I.A. coalition, led by the Congress Party—which dominated Indian politics until 2014. But it has been unable to offer a viable alternative to Narendra Modi’s party.

How will Canada position itself after this election?

Historical tensions

The Sikh diaspora represents around 2 per cent of Canada’s population, or almost 800,000 Canadians. It is also the largest Sikh community outside of India, which partly explains the strained relations between the two countries. The Sikh diaspora is heavily involved in a separatist movement, as illustrated by the organization of an unofficial referendum in Canada and other countries for the creation of Khalistan, a Sikh-majority state in the region that includes the Indian Punjab.

India accuses Canada of doing nothing to limit the activities of the movement, many of whose members are considered terrorists by Delhi. Modi’s government perceives the granting of Canadian citizenship to Sikh separatist leaders, and Ottawa’s inaction, as a form of interference in its internal affairs.

Modi’s BJP is a Hindu nationalist party with a public Hindutva philosophy: to make India a Hindu state by restricting the rights of minorities, whether Sikh, Muslim, Christian or other. Since 2014, the central government and those of other BJP-led states have adopted rules that discriminate against religious minorities, including the two-tier citizenship law or the one restricting interfaith marriage between Hindus and Muslims.

This “Hinduized” vision of India partly explains why the government attaches so much importance to the Sikh separatist movement, which is sustained by the diaspora.

The separatist movement had been less visible since the 1990s, but the arrival of the BJP in power has helped revive it. This situation is at the heart of diplomatic tensions between Canada and India, and directly affects their economic relations.

Moreover, in the development of its foreign and domestic policies, the Modi government engages in doublespeak. Within its borders, it adopts a narrative that the Hindu nation must be protected from any movement that undermines the country’s unity. In the current electoral context, Modi is using his strained relationship with Canada as an example to reinforce nationalist sentiment. Talking about ethno-religious tensions and propelling a Hindu nationalist discourse allows him to divert attention from more pressing issues, such as the state of human development in the country.

While the unemployment rate was around 6.6 per cent at the start of 2024, it is now 44 per cent among 20- to 24-year-olds and 14 per cent among 25- to 29-year-olds. In the 2024 World Press Freedom Index, India ranked 159th out of 180 countries. In terms of the Human Development Index, three out of every 100 babies born in 2022 will die before their fifth birthday.

Outside its borders, the Indian government prides itself on being the world’s largest democracy, thanks to the scale of its electoral process. But India’s democracy is in serious decline, with increasing intercommunal violence, information control through attacks on freedom of association and of the press, weakening of the opposition, and concentration of wealth in the hands of a few conglomerates close to Modi.

It’s hardly surprising, then, that some analysts speak of a “facade pluralism”, an “authoritarian drift”, a descent into a “competitive-authoritarian” system, or even the death of Indian democracy.

Canada has the most to lose

Since 2010, India and Canada had been negotiating the adoption of a comprehensive economic partnership agreement. A first hiatus took place from 2017 to 2022, but the Canadian government’s accusations against Delhi in September 2023 put a halt on the talks. For the time being, there is no indication that negotiations will resume any time soon, although India’s high commissioner to Canada, Sanjav Kumar Verma, recently stated in Montreal that he had no concerns about economic relations between the two countries.

It’s important to mention that Canada has the most to lose if trade with India were to cease. Beyond the fact that the value of bilateral trade between the two countries represents more for the Canadian economy, it is the content of imports and exports that is revealing.

Historically, the countries of the Global South, formerly referred to as the periphery, mainly sold raw materials, those of the “semi-periphery” manufactured goods, and those of the “centre”, more industrialized, high-tech goods. In the case of India and Canada, the opposite applies.

Canadian exports to India consist mainly of bitumen from the oil sands, metallurgical coal, lentils and unrefined diamonds. On the Indian side, three of the top five exports to Canada, in addition to shrimp and basmati rice, are pharmaceuticals, railcars and smartphones. Canada also has more small and medium-sized Canadian companies in India than India has SMEs here.

While India is Canada’s 10th largest economic partner, our country is not even among India’s top-25 partners. It trades more with Southeast Asian countries, the European Union, the United States, China, the United Arab Emirates and Saudi Arabia.

That said, both countries show intent on benefiting from each other. On the one hand, to achieve its economic growth objectives, India needs to invest massively in infrastructure construction, which is very attractive to various Canadian industries such as lumber.

On the other hand, India needs to protect its lentil imports, which are essential to feed its population (Canada supplies lentils when climate hazards damage India’s harvests). In addition, Canada could position itself favorably as an economic partner in India’s energy transition, particularly in the fields of renewable energies, such as solar power, and clean technologies. From an economic point of view, the tense political relations between the two countries do not benefit either of them.

How will Canada position itself following the election?

The Indian market, poised to become the fourth largest in the world by 2025, represents an economic opportunity for Canada. But can and should we develop trade relations with this country while ignoring the state of its democracy? The Canadian government will have to ask itself what kind of relationship it wants with India. Ottawa’s allegations of Delhi’s involvement in the death of Hardeep Singh Nijjar have opened a Pandora’s box of questions about the role it can and will play in influencing the Modi government’s authoritarian trajectory.

One thing is certain: Ottawa will not be able to ignore the Indian political context, given the weight of the Indian diaspora in Canada, both Hindu and Sikh.

Since last fall, Canada has seen a significant increase in the number of asylum seekers from India. The re-election of the BJP, if the last ten years are anything to go by, is likely to accentuate this trend since the majority of asylum claims from India are linked to religious persecution. Although the number is marginal compared to the overall number of asylum seekers, Canada is accepting more and more of them, demonstrating its gradual recognition of the context of violence in Modi’s India.

Given the economic relationship between the two countries is more important to Canada, it will be difficult for it to impose anything on India, which is increasingly attracting the attention of others for the development of economic partnerships. That said, levers do exist in the energy and food sectors.

Canada has a responsibility to engage in serious discussion with India, but it needs to think about how it wants to use bilateral and multilateral channels to influence Modi’s party and India’s democratic trajectory. It remains to be seen if Ottawa will position itself as a defender of democracy by questioning with whom and how it decides to do business. Finding a diplomatic way of preventing India from falling into authoritarianism would be a good way of regaining our lost diplomatic lustre and presenting ourselves as a positive leader during geopolitical turmoil.

This article first appeared on Policy Options and is republished here under a Creative Commons license.