India’s Rising Exports to Canada: Growth Drivers and Outlook
Over the past decade, exports from India to Canada have increased rapidly, driven by growing bilateral trade and investment ties. This article provides an overview of the major Indian exports to Canada, profiles top exported products, and examines the factors driving growth in exports between the two countries.
Surging Two-Way Trade
Trade between India and Canada has expanded significantly in recent years. Total bilateral trade hit $9.4 billion in 2021, up from just $3.2 billion in 2010. India’s exports to Canada grew from $1.9 billion to $3.8 billion over this period, representing a doubling in value.
India is now one of Canada’s fastest growing trade partners in Asia. The Land of the Maple Leaf is focused on diversifying trade beyond the U.S., and sees India as a key market. Meanwhile, the Indian government has made expanding exports a key priority.
Top Indian Exports to Canada
- Pharmaceutical Products: India’s largest export to Canada is pharmaceuticals, valued at $735 million in 2021. India supplies a range of generic drugs, biologics and over-the-counter products to meet growing Canadian demand.
- Precious Stones and Metals: Diamonds, gold and silver collectively accounted for $630 million in Indian exports to Canada in 2021. India is a major hub for cutting and polishing diamonds, some of which are shipped to Canada for jewelry manufacturing.
- Iron and Steel: As the 5th largest producer of steel, India exported $315 million worth of iron, steel and related products to Canada in 2021. Pipes, tubes, rods and steel wire are among the major exports.
Growth Drivers
Several key factors are responsible for the growth in Indian exports to Canada in recent years:
- Rising bilateral investments: Over 650 Canadian companies now have investments and operations in India. This business presence facilitates greater trade flows in both directions.
- Comprehensive Economic Partnership Agreement: India and Canada signed a CEPA in 2022 that will eliminate tariffs on over 90% of Indian exports to Canada once implemented. This free trade access will provide a major boost to two-way trade.
- Diaspora links: The Indian diaspora in Canada numbers over 1 million, forming strong cultural and business ties between the two countries. This facilitates greater exports and trade relationships.
- Resource endowments: Canada has abundant natural resources like potash and wood pulp needed by India’s large industrial economy. In turn, India exports finished products like machinery, steel and pharmaceuticals to Canada.
Future Outlook
The long-term outlook for Indian exports to Canada remains very positive. Two-way trade could hit $15 billion annually by 2025. India is focused on increasing exports of vehicles, apparel, cereals and information technology services to Canada in the years ahead.
With shared political and economic interests, growing investment ties and preferential access under CEPA, India-Canada bilateral trade is poised for robust growth in the 2020s. This will provide a major opportunity for Indian exporters across diverse sectors.
India’s Exports to Canada Has Grown Rapidly in Recent Years
Exports from India to Canada has increased substantially over the past decade. According to data from the Government of India, total merchandise exports to Canada grew from $1.9 billion in 2010 to $3.8 billion in 2021. This represent a doubling in value of Indian exports to Canada in just 10 years.
A major factor driving this growth is the rising trade ties and investments between the two countries. Over 650 Canadian companies now operate in India, facilitating greater two-way trade. Also, the Comprehensive Economic Partnership Agreement signed in 2022 will eliminate tariffs and boost India’s exports when implemented.
Outlook for Indian Exports Remains Strong
The future outlook for Indian exports to Canada remains very positive. According to projections from EXIM Bank of India, bilateral merchandise trade between India and Canada could reach $15 billion by 2025. This would represent a 60% increased from current trade levels.
Growth opportunities exists for Indian exports of vehicles, machinery, apparel, cereals and IT services to Canada in the years ahead. With shared political and economic interests between the two countries, Indian exports to Canada is expected to grow robustly this decade.
References:
https://www.theglobeandmail.com/canada/article-india-canada-international-student-recruitment/
https://commerce.gov.in/wp-content/uploads/2021/02/Trade-with-Canada.pdf
https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/ResearchPapers/91file.pdf
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