Canada’s Challenge with India

During his six-day trip to India, Canadian Prime minister Stephen Harper might find the Indian leaders, particularly Prime Minister Manmohan Singh, somewhat distracted and even meeting-wary.

That might not be because Mr. Singh is not interested in the Canadians’ visit: just that the Indian PM is a busy man these days. Not only has he got to deal with an unruly coalition that raises walls to every policy move he makes and a restive population, but he has also had to deal with a lot of foreign leaders.

For example, take October: earlier in the month, the Guyanese leader was in India around the same time the high-profile U.S. Treasury Secretary Timothy Geithner was holding meetings with Mr. Singh and other Indian officials; they were followed by the Russian deputy PM, Dmitry Rogozin.

Mr Rogozin was seeking more trade, including deals in arms and ammunition to India, and a resolution to liability and other issues surrounding a new nuclear power plant that Russia is helping India build in the south.

Then came the much reported visit by Australian PM Julia Gillard, who also wants to see more trade with India. Australia, like Canada, is rich with natural resources including uranium and is looking for markets beyond China.

Dr. Aditya Jha, Dr. Manmohan Singh (Indian Pri...

Dr. Aditya Jha, Dr. Manmohan Singh (Indian Prime Minister), Stephen Harper (Canadian Prime Minister) in India 2009 (Photo credit: Wikipedia)

Gillard signaled both countries will start talks to allow her country sell uranium to India while ensuring it does not help New Delhi boost its nuclear weapons capabilities. Her trip was also a culmination of Australian efforts to increase its profile in India and may be entice an Indian leader to reciprocate the visit.

As the month came to an end, a Jordanian prince visited Mr. Singh, followed by Spain’s King Juan Carlos, who was there with a business delegation to boost trade.

Needless to say, most of the western countries are wooing India, and China, for two key reasons – to sell raw materials, manufactured goods and technical know-how to them, and to secure investments.

That western countries are seeking markets in, and investments from, two ‘developing’ countries is but a proof of the paradigm change the world is witnessing.

But in theory at least Indian investments should be much more welcome than Chinese.

Indian investments come in from two sources – state-run companies and the privately owned giants such as Tata, Ambanis, Infosys and Wipro. Even the Canadian government does not seem to mind Indian state-run enterprises investing in the oil patch, perhaps on the premise that India is a democracy and therefore in the long run will not implement policies to threaten to another democracy.

Indian privately-owned giants are business oriented with profits and expansion as their philosophy. While they do not seem to have the Chinese firms’ appetite for high-profile purchases abroad, Indian companies have indeed been quietly spreading their wings. According to a Bloomberg report, between 2000 April and 2012 April, they made nearly 2000 acquisitions at a cost of 116 billion dollars, even though some say the real amount is much higher.

Among the most noted Indian private sector purchases is that of the British iconic Jaguar and Land Rover companies by Tata Motors from Ford.

There had been many doubts whether the purchase will be good for both Tata and Jaguar-Land Rover. But recently the company added 1,000 more employees and increased production at its plant in Liverpool, England, after seeing a growth in sales.

Canada has a better profile in India than Australia, whose prestige took a nose five after a spate of attacks on Indian students, but our bilateral trade with Asia’s third largest economy stands at just over five billion dollars a year while Canberra can boast of an 18-billion dollar trade bond.

It is not that Indian companies are least interested in Canada. Tata recently began feasibility study on two iron ore mines in Labrador while three Indian state-run oil companies are reportedly interested in a five billion dollar stake at Conoco Philips assets in the Oilpatch. There have been other takeovers over the past decade.

But with just under seven billion dollars of Indian investment in Canada (Canadian investments in India amount to a paltry half a billion dollars), Mr. Harper and his delegation will have their work cut out.






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