Flaherty looks to bolster ties

Finance Minister Jim Flaherty is looking to bolster business and trade ties with an emerging powerhouse economy during his visit to India this week. Historically, trade between the two countries has been slow, and  “Canadian companies’ recognition of India as a big global market is really a new phenomenon that has to do with the global economic realignment in the world,”  said Rana Sarkar, president of the Canada-India Business Council. “The interest level has been growing steadily.”

Still, Sarkar said Canada has to be more present in places like India. “We have to move away from traditional dependence on the U.S. market and into global markets,” he said. India will be forced to invest approximately $200 billion in infrastructure over the next 10 years to support its ballooning middle-class population and that’s good news for Canada, according to a recent Foreign Affairs trade document posted online.

“Canadian companies have much to offer India, particularly in construction, architecture, design, engineering and telecommunications,” it said. “It’s no longer simply a case of India catching up to the world; it’s becoming a case of the world catching up to India.” Although trade numbers between the two countries have swelled in recent years, they still come up short, business groups say.

Canadian exports to India hit $1.7 billion in 2008 (the latest year for which data is available) representing a 55% increase over 2005. And despite being one of this country’s largest consumers of fertilizer, buying $689.6 million worth in 2008, Canada still doesn’t make India’s top five import sources, a list that includes China, Saudia Arabia, United Arab Emirates, the U.S. and Iran.

Imports from India climbed 7.4% over 2005 to $1.9 billion. While two-way foreign direct investment has increased more than 17% to $528 million. Sarkar did say the trade goods-heavy data might overlook some inroads made into service industries. The two appear to be a natural fit in the business world considering more than one million Canadians share Indian descent and India’s large skilled and highly-educated English speaking workforce. Some, including the Canada-India Business Council, have said a shortage of regular flights to Asia has hindered trade between the two countries. A recent InterVISTAS Consulting study, commissioned by Emirates Airlines, said daily flights to the Gulf region gateway city of Dubai would see $480 million in economic benefits and create more than 2,800 jobs to Canada.

Another problem, according former clerk of the Privy Council and secretary to the cabinet Kevin Lynch, is Canada’s lack of exposure in India. “We need to build a Canada brand’ in India, whose potential payoffs are evident from successful Australian efforts throughout Asia,” Lynch wrote recently. The federal Conservatives named China and India “priority markets” earlier this year.

India is on track to be the second largest economy by 2050. Similar to China, India avoided the brunt of the recession and is expected to grow 6.5% this year. The Canadian government sees agriculture, food and beverages, the services industry, information and communication technology, oil and gas, electrical power, aerospace and defence as particular business areas to strengthen. Flaherty will visit officials, including his Indian counterpart Pranab Mukherjee, in New Delhi and Mumbai during his three-day stay started Monday.

The more interchange at the top level, such as ministerial and CEO visits, the better off we are, Sarkar said.