India and Canada are now once again well set to work together, with a significantly expanded agenda, in the short, medium and long term, as real partners for the new 21st century. It is not as though such a relationship of warmth and mutual support is new to the two countries. In the first decades after India gained its independence in 1947, especially under the leadership of Prime Ministers Jawaharlal Nehru and Lester Pearson, Canada and India were mutually supportive and effective collaborators, in both the bilateral and international contexts.  The many commonalities between us– an unshakeable commitment to democracy and the shared values that this implied, the multi-cultural, multi-ethnic and multi-religious nature of our two societies, to name but two - provided a strong foundation for such a relationship.  Beginning in the 1950s, Canada became and remained an important development partner for India for many decades. 

However, a hiatus of several years in the bilateral relationship developed later, first after India’s peaceful nuclear explosion of 1974, and then again after the Indian nuclear tests of May 1998.  This is now, happily, in the past, and today India-Canada relations are once again warm, cordial and meaningful, with both countries determined to strengthen them in every possible area in the coming months and years. 

This new phase in India-Canada relations began more than three years ago, with Canada’s publicly stated decision to “re-engage” India, an initiative that was welcomed by India.   The two countries have since embarked on a process of qualitative improvement and quantitative expansion of their bilateral ties. There have been a number of successful high level ministerial and official visits in the political, economic, commercial and cultural fields, as also in the area of science and technology, all of which have helped move the bilateral relationship forward. 

The visit of the Indian External Affairs Minister, Mr. Yashwant Sinha, to Ottawa in September 2002, and the return visit of the Canadian Foreign Minister, Mr. Bill Graham¸ to India in October 2003, were significant steps forward in this process.  The two Foreign Ministers agreed to make concerted efforts to intensify cooperation in a number of areas in the political, economic and cultural fields, and it was decided to institutionalize meetings at this level on an annual basis

Since then, several high level trade delegations have also been exchanged, including those led by the then Canadian International Trade Minister Pierre Pettigrew in April 2002 and by the then Canadian  Minister of Natural Resources Herb Dhaliwal in November 2002. 

Besides these important exchanges, the two countries have also established the necessary framework for expanding their trade and investment ties. India and Canada have a comprehensive treaty for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect of taxes on income and capital. A Bilateral Investment Promotion and Protection Agreement is under negotiation between the two countries. The annual bilateral trade between India and Canada has grown significantly over the last decade, from a total of C $ 788.49 million in 1992 to C $ 2.5 billion in 2004. Canadian presence has increased in the Indian banking, insurance and financial services sectors, as also in engineering and consultancy services.  Canadian investment in India has targeted telecommunications, environment, energy and mining.  However, with the total Canadian Foreign Direct Investment in India having reached just reached C$184 million in 2003, the potential for further Canadian investment in India remains enormous.

On the other hand, Indian investment in Canada has increased steadily in recent years, especially in the information technology and software sectors.  Indian companies with substantial operations in Canada include Tata Consultancy Services, BFL Software, Patni Computer Systems, Satyam Computer Services, WIPRO and Infosys Technology.   Other areas of significant Indian investment in Canada are pharmaceuticals, metals, petro-chemicals, auto-ancillaries and financial services.  Indian Foreign Direct Investment in Canada increased from C$ 18 million in 1999 to C$ $62 million in 2003.

In recent years, other areas of cooperation between the two countries have opened up in science and technology , especially in space technology, geo-sciences and geomatics.

The visit of the Canadian Prime Minister, Mr. Jean Chretien, to India in October 2003 marked a high point in the new flowering of the bilateral relationship.  Prime Ministers Vajpayee and Chretien issued a significant Joint Statement on October 24, 2003 in New Delhi.  The statement entitled, “Partners for the 21st Century” committed the respective Governments to an expanded partnership for the foreseeable future (text attached). The two leaders agreed that while building on their historic ties, future efforts need to take into account the significant economic, political and social changes under way in both countries.  They committed their countries to widening and deepening relations through strengthened links between the two governments, encouragement of greater commercial and economic exchanges, and closer contacts between their civil societies.

The Joint Statement thus set out the future roadmap for India-Canada relations. It clearly indicated that Canada and India had common interests, and laid out a framework to increase trade and investment, address each other’s security concerns, and strengthen civil society links. The two leaders reviewed the progress in bilateral relations since re-engagement. As a step meant to strengthen people-to-people contacts, Canada announced the establishment of a Consulate General in Chandigarh, the upgradation of the Canadian Consulate in Mumbai to a Consulate General, and the appointment of a trade representative in Chennai. The two sides also noted the significant investments by Indian companies in Canada in the field of information technology as well as Canadian investment in the Indian information and communications technology and financial services sectors, as also the role of the growing Indo-Canadian community, now estimated to be around one million, which is playing a positive, catalytic force in the bilateral relations.

The opening up of the Indian economy to foreign investment, with almost complete convertibility on current account, the emphasis on infrastructure upgrading and development, the extensive financial and monetary reforms, and the dramatic growth of Indian capabilities in cutting edge sectors such as IT, biotech, space technology, electronics, telecommunications and pharmaceuticals, all these  have created a climate that has made India extremely attractive to foreign investors, and also a prime location for the outsourcing of financial, technological and manufacturing processes, in short, the BPO capital of the world in many sectors. Besides BPO. the major investment opportunities in India are in oil and gas, hydro and other forms of energy, mining, construction, transportation, telecommunications, environmental technologies, agriculture, biotechnology, pharmaceuticals and information technology.

It is thus not surprising that India is one of the very promising new emerging markets identified by Canada as being of strategic importance. This decision by Canada was a consequence of the wide-ranging and sustained economic reform process initiated by India in July 1991, the end of the Cold War, the growing realization that Canada should expand its economic presence in markets other than that of the USA. Canadian companies are enjoying increasing success in the Indian market. Contracts have been signed in traditional Canadian areas of expertise such as power, communications and transportation. There are also promising new sales in sectors such as information technology, the environment and agro-processed items. The growth of service sector sales reflects Canadian strength in traditional areas such as consulting and engineering, as well as a growing Canadian presence in fields such as education, software development, and financial services.

On the investment side, the Indian government has modified its regulations to allow overseas investments in areas that are not necessarily the investor's core business. A previous restriction limiting such investment to 50 percent of the net worth of the Indian company, as also the overseas investment ceiling of US $100 million, have now been removed. Canada has benefited from these initiatives, which have led to a rapid increase in FDI in Canada by Indian software manufacturers. Since 2001, Indian flagship IT companies - Tata Consultancy Services, Wipro, Infosys and Satyam  - have expanded their operations in Canada,  setting up software development centers. Other areas of Indian investment in Canada include pharmaceuticals, metals, petrochemicals, auto ancillaries, and financial services.

The State Bank of India has, in mid-August 2005, opened its fifth branch in Canada, in a Toronto suburb, and plans to open two more, one of which will be near Vancouver, before the end of 2005.  Another major Indian bank, ICICI, has recently started operations with three branches in Brampton and Toronto, and the Bank of Baroda is expected to set up shop in Canada very soon, with the Bank of Punjab also contemplating a similar move.  It is to be hoped that the big Canadian banks, such as the Royal Bank of Canada and the Bank of Montreal, will decide on a similar move in the opposite direction very soon, and that those already in India such as the Scotia Bank and Toronto Dominion will try to expand their operations taking advantage of the latest relaxations provided in the latest Indian budget to foreign banks investing in India. 

India and Canada can also collaborate in third country projects by joining hands for undertaking joint ventures specifically in Africa, the Middle East and South East Asia for mutual benefit. India, with its technological skills and trained manpower, could successfully cooperate with Canada in civil construction, the development of infrastructure, machine tools, power generation and transmission equipment, telecommunication, engineering designs and computer software.

The deepening commercial and economic relationship between India and Canada is  not limited to the two governments, but extends to the private sector. There are several agreement between the Canada-India Business Council and the Indo-Canada Chamber of Commerce and the major Indian business organizations such as the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry. .

India is also, given its abundance of highly educated human capital, especially in the S&T field, a natural partner for Canada for collaboration in Research and Development (R&D).  India is home to some of the most prestigious engineering, applied sciences and management schools in the world.

During the visit of the Canadian Prime Minister, Mr. Paul Martin, to India in January 2005, the Prime Ministers of India and Canada reviewed the progress in their bilateral partnership achieved during 2004, and agreed to strengthen the architecture of the Canada-India partnership. The Joint Statement issued during the visit, which is attached, provides for the two sides to:

(i) Direct the designated Canadian and Indian scientific advisers to report on ways of advancing S&T collaboration, to conclude an inter-governmental S&T arrangement, and to encourage strategic collaboration in selected areas of science and industrial technologies. India and Canada agreed to contribute their expertise toward the creation of a tsunami early warning system for the countries of the Indian Ocean, in concert with multilateral efforts.

(ii) Deepen environmental cooperation, including the promotion of environmental friendly technologies.

(iii) Support an India-Canada CEOs Roundtable that would make recommendations for expanding economic ties, to conclude an Investment Promotion and Protection Agreement; and to take additional steps contributing to greater investment and trade, including trade missions.

(iv) Enhance people to people links through improved visa and consular services; strengthen health research co-operation; and renew our commitment to promote cultural ties in both countries.

More recently, the visit of the Indian Minister for Petroleum and Natural Gas, Mr. Mani Shankar Aiyar, to Calgary, the oil and gas capital of Canada, in early February 2005 for a road show offering 20 new oil and gas exploration blocks in India to Canadian petroleum entrepreneurs demonstrated the new and much higher level of interest among Canadian oil majors in moving to prospect for oil and gas in India.  This is undoubtedly due to the striking success of Niko Resources of Alberta, a partner, with Reliance Industries of India, in the largest gas find in the world in 2002, offshore of the Krishna-Godavari basin in south eastern India, as also of another Calgary firm, Canoro, which has struck oil in north-eastern India.

Canada and India have also moved to establish a mechanism for sustained bilateral technical cooperation in the oil and gas sector over the next several years. On 26th of August 2005, A Memorandum of Understanding was entered into between the Directorate General of Hydrocarbons (DGHH), Ministry of Petroleum and Natural Gas, Govt. of India and Alberta Research Council (ARC), Alberta for co-operation and collaboration in the field of oil and natural gas. The Directorate General of Hydrocarbons also awarded a Letter of Intent to Alberta research council Inc. for contract services and use of R&D facilities for assessing and reviewing  the sedimentary basins in India to estimate the reserves of oil and gas in India, suggesting utilization of available technologies for optimizing the exploration and exploitation of hydrocarbon resources from these belts, assist in establishment and operation of a Data repository for all Hydrocarbon related activities in India and study the feasibility for the establishment of a Research & Development Center in India, with ARC and DGH as Partners.

India participated in the January 31, 2006 Global Energy Conference in Calgary, and announced the possibility of Indian investments of $ 1 billion and possibly more in the Alberta oil sands, subject to financial and technical approvals.  Other areas identified for bilateral cooperation in this sector were, besides additional oil and gas blocks for Canadian firms, the possibility of Canadian supplies of oil and gas equipment for both downstream and upstream ventures as also, at the initiative of the Alberta Government, for the secondment of technical personnel from India to Alberta.

S & T Environment

The visit of the Canadian Minister of International Trade, Mr. Jim Peterson, to India in the first week of April, heading a relatively small but optimally focused business delegation of 60 plus, has not only helped maintain the business related momentum created by Prime Minister Paul Martin’s visit to India, but also registered significant progress on the potentially very important bilateral S&T Cooperation Agreement. 

Apart from the delegation’s five priority sectors – agribusiness, energy, including oil and gas, transportation, IT and telecommunications, and financial services – S&T cooperation was the sixth.  Given Canada’s evident world class expertise in several areas of S&T – environmental technologies and clean development mechanisms, quality control mechanisms, nano technology, and oil and gas exploration and extraction – a large number of bilateral cooperation options are opening up which might, over time, become as important as our direct commercial exchanges. 

Over the last six months, there has been an unprecedented frequency in our bilateral interactions, including three rounds of dialogue between the respective Foreign Offices – on Policy Planning, on Counter Terrorism, and the first ever Strategic Dialogue.  The second round of the Trade Policy Dialogue took place in mid-May, and during the visit of the Principal Scientific Advisor to the Prime Minister, Dr. R. Chidambaram to Canada at the end of May, substantive progress was made in identifying the priority areas of bilateral S&T cooperation.  A successful round of negotiations on Civil Aviation in early June led to an agreement to increase flights both ways by as much as 500%, and Air India restarted a direct service between Toronto and NewDelhi from May 15, 2005 – both developments which will undoubtedly expand not only people to people interactions but also business between the two countries.  A high profile visit to Canada by the Chief Minister of the Punjab and a productive, business-oriented visit by the Chief Minister of Chhatisgarh were also noteworthy.   

Over the last months of 2005, the momentum of high level exchanges between Canada and India was maintained, even accelerated.  While the Canadian Minister for Environment, Mr. Stephan Dion visited India in early September for discussions on both bilateral and multilateral/global environmental issues of mutual concern, his Indian counterpart Mr. A. Raja, visited Canada twice in  a few weeks – first barely 10 days after minister Dion was in India, when he came to Canada to participate in the preparatory ministerial level meeting for the global environmental conference, the COP-11, and then again for the conference itself, that was held in Montreal in November/December 2005. 

Canada being the Partner Country at the 11th Technology Summit in New Delhi in September 2005, the Canadian Minister for International Trade, Mr. Jim Peterson led a 115-member delegation to the Summit, which included a day-long session in Bangalore on September 19, besides the regular sessions on September 21-23 in New Delhi.  He was accompanied by Dr. Arthur Carty, the Chief Scientific Advisor to the Government of Canada.  During the visit, Minister Peterson announced that Canada would devote $6.75 million for promoting R&D cooperation between Indian and Canadian scientific and technological institutions, focusing on a whole raft of hitech areas: biotech, health research, medical devices, sustainable energy, nano science and nano technology, ICT, wireless, rural connectivity and earth sciences, besides infontainment.  Minister Peterson also voiced his full confidence that this cooperation programme would lead to many joint ventures and strategic tie ups that would benefit both countries.

Finally, within days of Minister Peterson’s above mentioned visit to India, the Indian Minister of External Affairs, Mr. K. Natwar Singh, visited Canada for detail discussions on all issues of mutual interests and concern with his Canadian counterpart, Foreign Minister Pierre S. Pettigrew.  The visit was exceptionally successful, with the two Ministers announcing enhanced counter terrorism collaboration, including through a joint workshop on financial networks and terrorism in 2006. Canada’s ongoing support for the work of the Shastri Indo-Canadian Institute, for promoting innovative science and technology partners between Canadian and Indian member universities was announced. 

The two sides agreed to find ways of enhancing bilateral energy relations.  The Indian side agreed to Canada’s proposal for nuclear safety collaboration and both governments will develop a mutually beneficial bilateral framework for this.  Scientific and technical contacts on a broader range of civilian nuclear issues within the public domain will be promoted. 

Canada will allow the supply of nuclear related dual use items to Indian civilian nuclear facilities under IAEA safeguards, in accordance with the Nuclear Suppliers Group dual use guidelines.  Finally, both governments agreed to pursue further opportunities for the development of the peaceful uses of nuclear energy, both bilaterally and through the appropriate international for a, consistent with their international commitments. 

In short, both sides reiterated and highlighted their commitment to the  continued high level engagement they say as essential for building the India Canada partnership for the future, and laying the groundwork for the visit of the Indian Prime Minister, Dr. Manmohan Singh, to Canada in 2006.

The latest and potentially significant move forward in the bilateral relationship was the signature, during the visit of the Indian Minister for Science and Technology, Mr. Kapil Sibal, to Canada in November 2005, of the Science and Technology Agreement which was one of the action points identified during Prime Minister Paul Martin’s visit to India in January 2005. The Agreement focuses on bridging the gap between scientific R&D and the eventual marketing of the discoveries made.  It will be funded by a corpus of C $ 13.5 million set up with matching contributions from the two sides, and one of the priority areas will be nano-technology, a sector with literally limitless applications. The two sides will also work towards the establishment of a nano-technology centre in India. An MOU in the IT sector was also signed on the occasion. 

Relations between Canada and India are thus, it can be said without any exaggeration, set for a takeoff, and even the sky is no longer the limit. 

The Prime Ministers of India and Canada met today, reviewing bilateral relations and discussing important international and regional issues. They agreed on initiatives that strengthen the India-Canada partnership and contribute to addressing global challenges more effectively.

Prime Minister Martin extended his deepest condolences on behalf of the people of Canada for the tragic loss of life and damage as a result of the tsunami of 26 December 2004. The Prime Ministers briefed each other on their respective efforts in responding to the disaster and contributions to relief efforts in the region. The two Leaders underlined the need for a strong and sustained international response to such adversity and welcomed coordination of relief efforts resulting from their participation in the Core Group. A multilateral initiative for regional warning and natural disaster preparedness was recognised by them as a priority.

Prime Minister Manmohan Singh welcomed Prime Minister Martin’s initiative for a meeting of G20 Leaders to discuss issues of global concern, such as terrorism, development and global public health. They agreed to work towards the recommendations of the High-Level UN Panel on Threats, Challenges and Change and reiterated their commitment towards contributing to a more effective, representative and accountable world body. Recent developments in their respective regions featured prominently in the talks, notably the transition to democracy in Afghanistan, India’s dialogue with Pakistan, the situation in Iraq, developments in South East Asia and the Americas. They agreed that our countries should enhance their dialogues on international, regional and global strategic issues.

The Prime Ministers undertook to build upon the substantial progress in the bilateral partnership achieved during the last year and agreed to enhance the architecture of the Canada-India partnership as follows:

Science and Technology (S&T) Initiative: Direct designated scientific advisers on each side to report on advancing S&T collaboration, conclude an inter-governmental S&T arrangement and encourage strategic collaboration in selected areas of science and industrial technologies. India and Canada agreed to contribute expertise toward the creation of a tsunami early warning system for the countries of the Indian Ocean, in concert with multilateral efforts.

Environment: Recognising the importance of environmental management and sustainable development, agreed to deepen environmental cooperation, including the promotion of environmental friendly technologies.

Partnership for Prosperity: Support a CEO Roundtable that would make recommendations for expanding economic ties; conclude an Investment Promotion and Protection Agreement; and take additional steps contributing to greater investment and trade, including trade missions.

People to People Links: Recognising our shared community and common history as natural assets, they agreed to enhance people to people links through improved visa and consular services; strengthen health research cooperation; and renew our commitment to promote cultural ties in both countries.

To achieve the goals set out in this Statement, the two Prime Ministers committed themselves to sustained political engagement, a structured exchange of visits at the Cabinet level and to promote dialogues between their officials.

Prime Minister Manmohan Singh accepted an invitation extended by Prime Minister Martin to visit Canada.

Prime Minister Vajpayee and Prime Minister Chrétien today committed their governments to an expanded partnership for the 21st Century.

While building on their historic ties, it was agreed that future efforts need to take into account the significant economic, political, and social changes underway in both countries. The two countries will strengthen government, commercial and civil society linkages as they forge their new partnership.

India and Canada will deepen their engagement in order to achieve the common objective of strengthening international and regional peace and security. The two leaders expressed their national stands on nuclear disarmament. However, they underlined the urgent need to increase international cooperation to prevent the proliferation of nuclear weapons and other weapons of mass destruction and their means of delivery. The two countries agreed to enhance their strategic dialogue on all these issues.

The two leaders noted the progress in bilateral relations since re-engagement and welcomed in particular:

The announcement of increased Canadian representation in India, through the establishment of a Consulate General in Chandigarh, upgrading of the Canadian Consulate in Mumbai to a Consulate General, and the appointment of a trade representative in Chennai;

Significant investments by Indian firms in Canada in the field of information technology, as well as Canadian corporate investment in the Indian information and communications technology and financial services sectors;

The extension of the Memorandum of Understanding between the Government of India and the Shastri Indo-Canadian Institute (SICI); and

Cooperation on counter-terrorism, particularly through the India-Canada Joint Working Group on Counter-terrorism – the first such working group established by India.

The Prime Ministers are committed to widening and deepening relations between the two countries through strengthened links between the two governments, encouragement of greater commercial and economic exchanges and closer contacts between their civil societies:

Strengthened Government Contacts

Formalize an annual dialogue on global issues at the level of Foreign Ministers and Foreign Secretary/Deputy Minister to discuss bilateral, regional, international and multilateral issues of mutual interest.

Strengthen cooperation in the global campaign against terrorism through the bilateral Joint Working Group on Counter-terrorism and through cooperation in multilateral fora.

Support the holding of the third meeting of the Indo-Canadian Legal Forum, involving the Supreme Courts of the two countries, at Ottawa in 2004.

Maintain the significant momentum in high-level visits with a view to achieving results on the shared vision for a new partnership.

Expansion of Commercial and Economic Exchanges

Commit their governments to increase the volume of bilateral trade and investment by jointly identifying priority areas and sectors for specific attention.

Formalize, on an annual basis, recently launched trade policy consultations between India and Canada at the Deputy Minister/Secretary level, which cover both bilateral and WTO issues.

Utilize the results, as appropriate, of the Asia Pacific Foundation of Canada review of bilateral trade, which includes reports on investment, merchandise and services trade, and the first ever comprehensive survey of the Canadian business community on doing business with India.

Accord priority to an enhanced policy dialogue and strengthened bilateral cooperation in science and technology, research and development, and the environment.

Civil Society Linkages

Encourage multiple-level contacts between the various segments of the civil society, especially as there is a large and growing population of Canadians of Indian origin and India is the second largest source of immigrants to Canada.

Promote greater cultural exchanges beginning with the early completion of a joint agreement on film, television and animation co-production.

The Prime Ministers agreed that the vision they outlined today will benefit both of their societies in the coming years. They committed their governments to sustaining the leadership required to realize this shared vision for a 21st century partnership.