Canada-India Relations: Trust Issues but Canadian Pension Funds Continue Investing in India

Canada-India Relations: Trust Issues but Canadian Pension Funds Continue Investing in India

Canada-India relations have recently taken a sharp downturn as allegations emerge against India surrounding the assassination of Hardeep Singh Nijjar, a figure linked to Khalistani separatism. As Prime Minister Trudeau expresses distrust towards India, Canadian pension funds continue to channel significant investments into Indian markets, reflecting a strong belief in the nation's growth. Canada and India have mutually invested approximately C$36.5 billion from 2014 to 2023, a period marked by increasing economic ties despite diplomatic challenges.

Investments and Canadian Pension Funds in India

Canadian investment in India climbed rapidly, with pension funds making up about 50% of the total Canadian investment flows into the Asia-Pacific region from 2019-2023. These pension funds have substantially increased their stakes in India, drawn to sectors like real estate, financial services, and industrial transportation. Notably, C$11.9 billion was injected into Indian markets over the last five years. This growth in investment comes despite rising tensions between the governments.

Impact of Diplomatic Tensions on Investments

While Canadian pension funds are drawn to India's potential, ongoing tensions could raise concerns over future investments. The geopolitical landscape remains uncertain as Canada-India relations continue to strain. It will be essential for Canadian investors to evaluate these risks against the backdrop of an Indian economy anticipated to become the world’s third-largest by 2027. Despite the current challenges, Canadian pension funds exhibit resilience and commitment to the Indian market.