At Delhi’s G20 summit, a ‘scramble for India’ and fears that Canada may miss an opportunity are top of mind

The applause rattled the fixtures of the Capitol Building in Washington, D.C., as lawmakers rose to their feet, with whoops and chants of “Modi, Modi, Modi” coming from the public gallery.

Over the course of a roughly hour-long speech in June, Indian Prime Minister Narendra Modi received 15 standing ovations and was interrupted multiple times by eruptions of long applause, including one for a declaration that India would soon be the world’s third-largest economy.

“We are not only growing bigger but we are also growing faster,” Mr. Modi said. “When India grows, the whole world grows.”

This is not mere hyperbole. Now officially the most populous country in the world, having overtaken China this year, India’s economy is on track to surpass Japan’s by the end of the decade.

By then, India’s GDP is expected to have more than doubled, from US$3.5-trillion to US$7.5-trillion.

Mr. Modi will have the perfect opportunity to sell this success story to a global audience later this month, when leaders of the Group of 20 countries gather in New Delhi.

The summit will also underline India’s growing clout as a geopolitical player, courted by the West as a potential counterbalance to China, even as Mr. Modi stakes out a largely independent foreign policy that has seen New Delhi remain close to Russia despite the war in Ukraine.

Canada is not blind to India’s changing position. Ottawa’s Indo-Pacific Strategy identifies New Delhi as a “critical partner,” promising to increase economic ties and security co-operation.

But while Mr. Modi has actively courted both former U.S. president Donald Trump and his successor, Joe Biden – and has good ties with the leaders of the U.K. and Australia – his relationship with Prime Minister Justin Trudeau is said to be strained, part of wider diplomatic tensions between Ottawa and New Delhi that some fear could see Canada sidelined as India flexes its growing economic muscle.

“Canada is well placed, but it should be careful to make sure it’s not left behind in the scramble for India,” said Ganeshan Wignaraja, professorial fellow in economics and trade at Gateway House, a Mumbai think tank.

Disagreements between New Delhi and Ottawa are primarily rooted in the issue of Sikh separatism. Canada is home to the largest Sikh population outside India and is a major hub of the Khalistan independence movement, which seeks the creation of a Sikh homeland.

After an unofficial referendum in Ontario this year – in which, organizers said, tens of thousands took part – and Sikh protests outside Indian diplomatic missions, New Delhi complained angrily that Canada was not doing enough to control a movement it regards as extremist.

“We call upon them to prevent anti-India activities by individuals and groups based in their country,” a spokesman for India’s Ministry of External Affairs said in November, adding that Canada should designate certain Sikh activists as “terrorists.”

Many Sikhs in Canada see this as an issue of free speech – and say India’s angry reaction is indicative of how the country has taken an increasingly illiberal turn under Mr. Modi and his Hindu nationalist Bharatiya Janata Party (BJP). The pressure on Ottawa has come amid a renewed crackdown on Sikh activism in Punjab itself and growing violence against Muslims in India, with antipathy toward both minorities often stoked by leading BJP politicians.

“In India, anyone who speaks about Khalistan faces very intense persecution, not just them but their families too,” said Balpreet Singh, a spokesperson for the World Sikh Organization of Canada. “This culture of fear is something India wants to perpetuate in Sikhs outside of the country too.”

Mr. Singh said he was concerned India was using its growing economic clout to “get Canada to play ball and suppress Sikh voices.”

With a large, young population and strategic location, India was always poised to become a major player in global trade, but its transformation has been expedited by growing concerns – economic and political – over China. That country’s pandemic lockdowns, which sent ripples through global supply chains, and an increasingly uncertain economic picture, prompted many companies to look for a “China+1″ strategy, as governments encouraged derisking or even decoupling entirely from the Chinese economy.

Along with Vietnam and Indonesia, India is seeking to capitalize on the outflow of investment from China, with New Delhi promising to boost manufacturing to 25 per cent of GDP from about 15 per cent currently. Mr. Modi’s administration has invested 100 trillion rupees ($1.6-trillion) in a plan called Gati Shakti, or “strength of speed,” aimed at reducing red tape and streamlining approvals for new projects.

“A whole combination of reforms have created an environment where it’s easier to do business,” said Nadir Patel, Canada’s former high commissioner to India and now a senior strategic adviser at Norton Rose Fulbright, a law firm. “There’s been a significant focus by the Indian government on foreign investment to help spur growth.”

Electronics giants Apple and Samsung are already operating plants in India. Taiwanese components supplier Foxconn recently signed deals worth $800-million to build phone parts and semiconductors in the southern state of Karnataka. According to one projection, India could account for as much as 40 per cent of global iPhone production by 2025, rivalling China.

Historically, South Asia has played a limited role in global supply chains, Mr. Wignaraja, the Gateway House analyst, wrote in a paper this year. But he pointed to the growth in electronics, as well as vehicle manufacturing and investments in semiconductor plants, as evidence that India “can lay the foundation to become a complementary Asian manufacturing hub to China.”

“India would be a natural hub for Canadian companies looking to leave China,” he told The Globe and Mail. “Canadians of Indian origin are also a big potential bridge that can and should be leveraged by Ottawa.”

Canada currently accounts for 0.5 per cent of total foreign direct investment in India, according to government statistics, with most of that money flowing into the well-established service sector. Pension funds are starting to get into India, and there are also opportunities in the renewables (India has large lithium reserves) and energy sectors.

There is potential for far more. Canada’s Minister of International Trade, Mary Ng, who is due to lead a mission to India in October, has said the current level of trade is “just not good enough,” while Indian Commerce and Industry Minister Piyush Goyal has said the relationship has been “one of lost opportunities.”

It’s unclear whether Mr. Trudeau’s presence in New Delhi will help make much progress, however. The Prime Minister’s last trip to India, in 2018, was dominated by the Sikh issue, with his then-national security adviser, Daniel Jean, later testifying to lawmakers that Mr. Trudeau had been caught up in an “orchestrated disinformation campaign to tarnish Canada.”

In 2020, Mr. Trudeau angered New Delhi again by voicing concern over its handling of protests by farmers, many of them Sikhs. While Ottawa has consistently said it does not support separatism, Indian media often paint Canada as “soft on terrorism” when it comes to the Khalistan issue, even as some Sikh groups in Canada feel the government does not do enough to protect them.

“I think it would be fair to say of all the countries in the West, India-Canada relations perhaps are the weakest,” said Harsh Pant, vice-president of the Observer Research Foundation, a New Delhi think tank. “There’s a sense that perhaps this government in Canada has been rather insensitive to India concerns on the issue of Khalistan.”

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Whether Mr. Trudeau can thread the needle of reassuring New Delhi while standing up for Canadians’ right to express themselves peacefully is unclear. Sikh groups complaining of harassment and intimidation by New Delhi have called for India to be included in an ongoing probe into foreign interference in Canada, a move supported by the New Democratic Party – whose leader, Jagmeet Singh, is a Sikh – but one that would undoubtedly infuriate the Indian government.

A desire to court India as an ally, some critics say, has dampened Western criticism of human-rights abuses.

“A democratic India would be a powerful partner in countering authoritarian China, but these values are under attack in India,” wrote Knox Thames, a former U.S. State Department official, in June. Under Mr. Modi, opposition leaders have been jailed, media outlets have been forced to close and violence against minorities is on the rise. In the past five years, India has fallen 10 points in a global ranking by Freedom House, which now categorizes the self-styled world’s largest democracy as only “partly free.”

Ethnic tensions exploded in recent weeks in the state of Manipur, with dozens killed. Mr. Modi was criticized for not doing enough to stop the violence. Elections next year are also bound to be fraught, as an unsteady coalition of opposition parties seeks to unseat the BJP, which has dominated Indian politics for almost a decade.

How the West should respond to India’s democratic backsliding is unclear. Any embrace of Mr. Modi is boosted by a pliant media back in India, strengthening him ever further. But nor is it clear that criticizing India would have the desired effect: The West has long pressed China on human rights with limited results, and Mr. Trudeau’s intervention in the farm protests did little but damage India-Canada relations.

Mr. Pant said India is open to criticism, but not lecturing, from the West. “There’s a way of asking questions – do you do so in an accusatory manner, pointing fingers, or as a fellow partner in the path to democracy?” he said. “That’s what makes the difference.”

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Mr. Patel, the former ambassador, said improved ties would give Ottawa more influence and opportunity to voice any concerns. “The closer the friendship, the closer the partnership and bilateral relationship, the greater opportunity there is.”

Such ties are developing, he said, adding that the loud disputes over issues such as Khalistan often overshadow the broadly positive trend of India-Canada relations.

“From a bilateral relationship perspective, there will always be issues to navigate,” Mr. Patel told The Globe. “Are those challenges enough to overtake or dominate the overall relationship? I would argue no.”

He pointed to Mr. Goyal’s recent visit and ongoing discussions on a trade deal as signs that any diplomatic strain was not having an impact on the economic front. He said huge opportunities remain for increasing Canadian investment in and trade with India, both as a place to manufacture goods and a rapidly expanding market for Canadian exports.

“Whether we land a trade deal with India or not remains to be seen,” Mr. Patel said. “But I can’t recall a time in recent years where the momentum and commitment to get something done is as strong as it is now.”

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