Canada’s foreign direct investment (FDI) into India doubled after the pandemic years even as India’s own investments into Canada show signs of slackening in recent years.
The cumulative equity FDI inflows from Canada rose from $1.8 billion in March 2019 to $3.9 billion in March 2024, shows data from the Department for Promotion of Industry and Internal Trade (DPIIT).
The overall share is up from 0.42 per cent to 0.57 per cent during the same period, suggesting that Canadian FDI grew faster than overall FDI during this period (chart 1).
The FDI numbers reflect a substantial investment in a venture such as a foreign company setting up a factory in India.
Such investments are typically seen to be long term in nature.
The investments gain significance amid controversy resulting in India and Canada expelling diplomats on Monday.
This came after Canada’s allegations of Indian authorities being involved in the killing of Canada-based Hardeep Singh Nijjar.
India has accused Canada of providing space to extremists in the country.
Canada’s rank in India FDI has been steadily rising. It was 27th in 2015, 19th in 2019 and 17th in 2024.
The overall share remains less than 1 per cent.
India’s overseas direct investment into Canada rose from $1.95 billion in March 2021 to $2.14 billion in March 2024, according to available data from the Department of Economic Affairs (DEA).
This represents an 8 per cent increase of India’s investments in Canada.
The investments by Canada into India rose 96 per cent during this same period.
Canada is the ninth largest foreign portfolio investor (FPI) in India.
Foreign portfolio investment typically involves more short-term investments, such as buying and selling shares on the stock market or trading debt instruments.
The total value of such FPI holdings has touched $27.9 billion as of September 2024, shows depository data.
The bulk of this is deployed in equities ($23.7 billion), followed by debt ($3.6 billion) as well as hybrid and other instruments ($0.7 billion).
The total value of Canadian FPI holdings was $7.6 billion in March 2015.
The surge has meant that Canada’s share of overall FPI holdings has risen from two per cent to 2.8 per cent during this time.
It had touched 3.7 per cent in March 2020 during the worst of the pandemic fall.
The increased share may well reflect the fact that much of these investments are coming in through pension funds which are relatively long-term players.
