More Canadian businesses need to take advantage of trade opportunities with India, especially in the country’s “hottest” economic sectors, a new report suggests.
The report, titled “Hottest Prospects for Canadian Companies in India,” was released Tuesday by the Conference Board of Canada’s Global Commerce Centre and outlined several key advantages to increasing trade with India.
“Few Canadian companies have taken full advantage of the rapidly growing Indian economy,” said Danielle Goldfarb, the Conference Board’s Associate Director, Global Commerce Centre.
“But Canadian firms are world leaders in some of India’s ‘hottest’ economic sectors. Canada’s demonstrated strengths in other markets could be adapted and applied to India’s needs.”
India, the world’s second most populous country, represents 7 percent of the global economy and is projected to comprise 11 percent by 2030. The country’s young population and growing middle class offer “tremendous opportunities” for Canadian businesses, says the report.
In 2012, India announced that it would allow greater foreign investment in relatively closed sectors, such as retail, airlines, insurance, and broadcasting. Though these efforts at reform still face challenges, Canada’s particular economic strengths make it well positioned to align with India’s available sectors.
Some sectors, however, present more opportunity than others due to their growth potential and relative openness to Canadian commercial activities.
The sectors that present the most opportunity for Canadian businesses include autos, machinery, transport, education, energy, communications, retail, food products, and financial services.
Trade with India also presents an attractive alternative to Canada’s traditional trading relationships such as with the U.S., which has stagnated amidst the recent recession, says the report.
Though India’s economy is currently the 10th largest in the world, it is expected to move up to fourth largest by 2020, according to World Bank estimates. India’s economy has also shown rapid growth over the last decade, averaging 9 percent real annual growth in the period 2003-07, 7 percent over 2008-11, and 5 percent in 2012.
Less than one percent of Canada’s goods exports currently go to India, but this is expected to increase sharply after a trade deal between the two countries is slated for completion later this year.
Two-way Canada-India trade currently totals less than $5 billion. However, both countries have already committed to increasing bilateral trade to $15 billion by 2015.
In February in New Delhi, the federal government completed the seventh round of negotiations toward a Canada-India comprehensive economic partnership agreement.
“Our government is committed to building on our already-strong ties with India to create a partnership that will lead to jobs, growth, and long-term prosperity for workers in both our countries,” Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway, said in a statement.
“More than a million Canadians of Indian origin is clear proof of how both business and people-to-people ties are helping us deepen the Canada-India relationship.”
Ottawa has identified core economic opportunities in India in the energy, agriculture, infrastructure, and education sectors. A Canada-India joint study concluded that a trade agreement between the two countries could boost Canada’s economy by at least $6 billion.