Increased bilateral trade offers major growth opportunities for both countries to establish more global footprint
NEW DELHI—Trade between India and Canada is expected to reach $15 billion by 2015 thanks to low production costs and enhanced innovation efforts between the two countries, according to senior Indian officials.
Indo-Canadian trade currently stands at around $5 billion, but a tripling of that number is reasonable because of the immense complimentary opportunities in the industrial and services sectors and burgeoning manufacturing operations in India, says Yuen Pau Woo, CEO of the Asia Pacific Foundation of Canada.
“India is a rapidly growing economic power and Canada’s market share there is well below the global market share,” he says. “Because we are starting from a lower base, the potential for bilateral trade growth is very high.”
As India enhances efforts to increase its footprint on global supply chains, it will spend more on its airports and sea-ports to answer issues relating to more global trade, says Jerome Bourque, an economist at Export Development Canada (EDC).
“India is investing a trillion dollars to improve infrastructure,” he says. “And if you look at the demographic profile in India, it’s a very young population that’s growing rapidly and looking for new job opportunities which will create a new demand for goods and services. This represents a huge opportunity for Canada to increase its trade there.”
Woo says Indian manufacturing is garnering increased global attention because it can develop products designed for low-end consumers that’s very much based on current technologies.
“Indian manufacturing companies have developed an incredible talent to customize products and technologies for mass markets that may not be able to afford the prices of more industrialized countries, like cars and computer,” he says.
These products can reach a very large customer base despite having lower profit margins, he adds.
“It’s the innovation behind these products that’s getting the attention of the industrialized country consumer because there is a global pressure to cut costs,” he says.
Bourque agrees that India offers Canadian companies major opportunities in both the auto and telecommunications sectors.
“India has a booming middle class that represent major opportunities for Canadian component manufacturers because there is an increased demand for products that Canadians desire too like cars and electronics,” he says.
Woo says that while Canada and India will never be major trading partners, increasing bilateral trade will improve the relationship between the two countries and offer Canadian companies an opportunity to enter more global markets.
“When they look at the menu of opportunities, there’s no question that emerging markets like India offer the highest growth prospects and if Canadian companies want to survive, they have to include these countries in their long term strategies,” he says.