Canada Faces Economic Impact Due to Diplomatic Dispute with India

October 6, 2023

The diplomatic tensions between India and Canada have led to potential economic consequences for Canada, particularly in the education sector, as per research by the Imagindia Institute. A key aspect of this impact is a potential decrease in the number of Indian students choosing Canada for higher education. Even a 5% decline in Indian student enrollments in 2024 could result in a significant economic loss for Canada.

Impact on Canadian Economy

India is the largest source of international students in Canada, with an estimated 200,000 Indian students arriving annually.
These students contribute substantially to the Canadian economy, with each student spending an average of $16,000 during their education, including expenses like laptops, housing, security, and airfare.
The total expenditure for two years of study and stay averages around $53,000 per student, with a total economic injection of $69,000 per student into the Canadian economy.
A 5% decline in the number of Indian students arriving in Canada in the January intake alone could result in a $230 million loss for Canada.
If similar declines occur in the May and September batches, the overall loss to Canada would reach $690 million.
Fewer visa requests would also lead to a loss of $3 million in visa fees for the Canadian High Commission in India.
Additionally, Indian students often support Canadian businesses post-graduation, and a decline in their numbers could lead to a $34 million loss for small Canadian firms.

Background of Diplomatic Tensions

The diplomatic dispute between India and Canada has escalated over time.
Canada moved most of its diplomats working in India out of New Delhi to either Kuala Lumpur or Singapore in response to India’s request to reduce its diplomatic staff in the country.
Tensions escalated when Canadian Prime Minister Justin Trudeau raised suspicions of Indian involvement in the killing of a Sikh separatist leader in Vancouver.
Canada halted talks on a proposed trade treaty with India and postponed a trade mission to the country.
Trudeau alleged Indian government agent involvement in the killing, a claim India dismissed as “absurd.”
Both countries expelled diplomats and took other retaliatory measures, including India suspending the issuance of new visas for Canadians.

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