Law Firm in India

India & Canada - Business Opportunities

India & Canada wish to relaunch CEPA negotiations. Read this article for current trade scenario & opportunities between the two countries.

Canada and India have longstanding bilateral relations built upon shared traditions of democracy, pluralism and strong interpersonal connections. Canada is home to one of the largest communities of the Indian diaspora, with approximately 4% of Canadians being of Indian heritage (1.4 million people).

In March 2022, both countries agreed to relaunch negotiations for India-Canada Comprehensive Economic Partnership Agreement (CEPA) and an interim agreement or Early Progress Trade Agreement (EPTA) that expedites mutual commercial gains, thus setting the stage for the resumption of the negotiations for a free trade agreement (FTA).  

Market Size

  • India is Canada’s 11th largest export market and 12th largest trading partner overall.
  • Canada's economic partnership with India is about USD 100 billion.
  • The two-way trade now stands at USD 10.5 billion and services exceed USD 6.67 billion.
  • Two-way foreign direct investment is now at USD 5 billion, while portfolio investment is approaching USD 65 billion from public sources.
  • With imports worth USD 2.68 billion, and exports worth USD 2.9 billion in 2020-21, India had a small trade surplus of nearly USD 200 million with Canada.
 

Major items of trade

  • India's exports to Canada mostly include gems, jewelry and precious stones, pharmaceutical products, ready-made garments, mechanical appliances, organic chemicals, light engineering goods, iron & steel articles, etc.
  • India’s imports from Canada include pulses, roots & tubers, newsprint, wood pulp, asbestos, potash, iron scrap, copper, minerals and industrial chemicals, etc.
  • India seeks to raise its merchandise exports to as much as USD 1 trillion by 2027. It is on course to beat a record export target of USD 400 billion this fiscal year, as global demand for merchandise has improved dramatically. India’s merchandise exports to Canada rose by 25% in January 2022, to USD 3 billion; while Canada’s rose 10% to USD 2.6 billion.


Business opportunities in key sectors


Agriculture


Agriculture in India is projected at a CAGR of 4.9% during 2022-2027. India and Canada signed a Memorandum of Understanding (MoU) in 2010 which led to sub-groups on knowledge exchange in emerging technologies, animal development and agricultural marketing. India is a major potential market for Canadian agriculture and agri-food products. India is a strong importer of vegetables and a growing market for feed oil cakes, canola oil and grains. Pulse crops account for over 95% of Canadian agri-food exports to India.

Custom Tariff on Agriculture

Goods Unit of Measurement Most Favored Nation (MFN) Tariff Applicable Preferential Tariff
Chocolate, spices, coffee/coffee extracts, plants/ parts of plants, cereals or bakers' wares (provided any added substance is not used for replacing, in whole or in part, any milk constituent, & the product retains the essential character of yogurt, not put up for retail sale) KGM 6.5% Free
Potatoes, fresh or chilled (seeds) KGM USD 4.94/tonne Free
Mushrooms & truffles KGM Free Free
Dates, figs, pineapples, avocados, guavas, mangoes & mangosteens (fresh and dried) KGM FREE FREE
Wheat & meslin – seed (within access commitment) TNE USD 1.90/tonne FREE
Wheat & meslin – seed (over access commitment) TNE 49% FREE
 

Infrastructure


Infrastructure in India is estimated to grow at a CAGR of approximately 7% during 2022-27. Government plans to invest about INR 102 lakh crore on infrastructure projects by 2024-25. India is expected to become the third largest construction market globally by 2022. India has a requirement of investment worth INR 50 trillion (USD 777.73 billion) across infrastructure by 2022 for sustainable development in the country.

Custom Tariff on Infrastructure

Goods Unit of Measurement Most Favored Nation (MFN) Tariff Applicable Preferential Tariff
Siliceous fossil meals (e.g., kieselguhr, tripolite & diatomite); similar siliceous earths, whether or not calcined, of an apparent specific gravity of 1 or less. KGM FREE FREE
Emery, natural corundum, natural garnet & other natural abrasives KGM FREE FREE
Granite, porphyry, basalt, sandstone & other monumental or building stone, whether or not roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape. TNE FREE FREE
Marble & travertine TNE FREE FREE
Ecaussine & other calcareous monumental or building stone; alabaster TNE FREE FREE
 

Automotive


The India passenger car market was valued at USD 32.70 billion in 2021 and is expected to reach a value of USD 54.84 billion by 2027 while registering a CAGR of over 9% during 2022-2027. In a recent survey, India ranked 1st in the world market in terms of unit production for 2 wheelers, 3 wheelers and tractors. According to NITI Aayog and Rocky Mountain Institute (RMI), India's electric vehicle EV finance industry is likely to reach INR 3.7 lakh crore (USD 50 billion) by 2030. 

Custom Tariff on Automotive

Goods Unit of Measurement Most Favored Nation (MFN) Tariff Applicable Preferential Tariff
Corrosion resistant coatings specificallyformulated for use in the manufacture of mirrors, semiconductor devices. LTR FREE FREE
Varnishes (including lacquers), paints (including enamels) LTR 6.5% 3%
Outboard motors NBM FREE FREE
Reciprocating piston engines of a kind used for propulsion of vehicles:
  • Of a cylinder capacity not exceeding 50 cc
  • Of a cylinder capacity exceeding 50 cc but not exceeding 250 cc
  • Of a cylinder capacity exceeding 250 cc but not exceeding 2,000 cc
   NBM  NBM NBM    FREE  FREE FREE    FREE  FREE FREE
Powered by electric motor; chain hoists.   NBM   FREE   FREE
Jacks; hoists of a kind used for raising vehicles; other jacks & hoists, hydraulic.    NBM    FREE    FREE
 

Information and Communication Technology (ICT)


The market is expected to reach USD 3,818.36 billion in 2026 at a CAGR of 7.4%. In the Union Budget 2022-23, the allocation for IT and telecom sector stood at INR 88,567.57 crore (USD 11.58 billion). The Government introduced the Software Technology Park (STP) Scheme, which is a 100% export-oriented scheme for the development and export of computer software, including export of professional services.
India’s IT and business services market is projected to reach USD 19.93 billion by 2025.

Custom Tariff on ICT

Goods Unit of Measurement Most Favored Nation (MFN) Tariff Applicable Preferential Tariff
Optical fibres, optical fibre bundles & cables MTR FREE FREE
Other instruments & apparatus, specially designed for telecommunications (e.g., cross-talk meters, gain measuringinstruments, distortion factor meters, psophometers) - FREE FREE
 

Renewable Energy


The Indian renewable energy market is expected to register a CAGR of more than 10% during 2022-2027. This sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity in a recent survey.

Custom Tariff on Renewable Energy

Goods Unit of Measurement Most Favored Nation (MFN) Tariff Applicable Preferential Tariff
Photographic plates & film in the flat, sensitized, unexposed, of any material other than paper, paperboard or textiles; instant print film in the flat, sensitized, unexposed, whether or not in packs (instant print film) NMB 6.5% FREE
Other film, without perforations, of a width exceeding 105 mm; of a width exceeding 610 mm and of a length exceeding 200 m, for colour photography (polychrome) MTK 6.5% FREE
Pickling preparations for metal surfaces; fluxes & other auxiliary preparations for soldering, brazing or welding; soldering, brazing or welding powders & pastes consisting of metal & other materials; preparations of a kind used as cores or coatings for welding electrodes or rods. KGM FREE FREE
Preparations & charges for fire-extinguishers; charged fire-extinguishing grenades. KGM FREE FREE
Chemical elements doped for use in electronics, in the form of discs, wafers or similar forms; chemical compounds doped for use in electronics. KGM FREE FREE
Safety fuses; detonating cords; percussion or detonating caps; igniters; electric detonators. - 6.5% FREE
 

Conclusion

Business between India and Canada has been robust over the years. As mentioned before, two-way foreign direct investment is now at USD 5 billion, while portfolio investment is approaching USD 65 billion from public sources. Further, more than 400 Canadian companies have a presence in India, and more than 1,000 companies are actively pursuing business in the Indian market. Indian companies in Canada are active in the fields of Information Technology, software, steel, natural resources, and banking sectors. Under these circumstances, an FTA will boost trade significantly between the two countries.

 

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