Canada must improve woeful trade record with India, chamber warns

OTTAWA (CP) - Canada's largest business group is sounding the alarm over this country's miserable trade and investment performance with a major emerging economic superpower - India. In a report to be issued Monday, the Canadian Chamber of Commerce details the poor record of firms and unfocused efforts by Canadian governments that have left Canada outside looking in on the tremendous potential of the world's second most populous country.

"We have a lot of catching up to do just to get on India's radar screen," said Chamber president Nancy Hughes Anthony.

"It's never too late, but obviously the longer you stay on the outside, the steeper the climb."

The 41-page document makes a series of recommendations for expanding the economic relationship with India, which along with China, has one of the world's fastest expanding economies with annual growth rates ranging from seven-to-nine per cent.

But despite several synergies and advantages, including the large Indo-Canadian diaspora, Canada last year exported a mere $1.7 billion in goods to India, the vast majority in primary commodities such as newsprint, metals and wheat. That represents only 0.5 per cent of Canadian exports and less than a quarter of what Australia ships to India.

Trade is penetrating into India. In the past five years, the country's imports have grown an average of 22 per cent annually and trade in the services sector has grown even faster. But Canadian firms have yet to fully exploit the situation.

This is partly a hangover from cool diplomatic relations between the two countries over India's use of Candu reactors to spark its nuclear weapons program, and continued nuclear tests. And it's partly a reflection of the long-standing practice of Canadian businesses to look primarily to the U.S. for trade and investment.

The report points to a number of opportunities that Canadian firms are well positioned to exploit, including India's massive program to modernize its transportation, power and telecommunications infrastructure, estimated to be worth about $140 billion over the next decade.

India is also in need of foreign expertise in engineering and services, the report states, and here the picture is less bleak with the presence of Canadian firms such Sun Life, Scotiabank, and SNC Lavalin, as well as Bombardier.

The report praises recent trade missions to India by the federal government, Ontario and Quebec as steps in the right direction, but notes there needs to be greater co-ordination, focus and follow-through. It quotes an Indian business contact as calling Canadians "suitcase investors" who "come, look around and leave."

Among the recommendations:

-The federal government should move quickly to complete a Foreign Investment Protection and Promotion Agreement with India, and also move to negotiate an enhanced trade, investment or services deal.

-Ottawa should appoint a senior level "Indian champion" to oversee the relationship;

-Hiring more immigration officers to fast-track business class visas for temporary visitors, reducing wait times that can last up to five years;

-Greater co-ordination among federal and provincial governments and business in their efforts to improve trade and investment and a common "Canada brand" look during missions to India.

The report cautions there are risks to investing in India, including some discriminatory tax regulations and corruption. But even firms that don't want to jump in should have an India strategy, Hughes Anthony said.

"Suppliers from these lower cost countries like India are now moving into the U.S. market and threatening some of the long established markets Canadian industries have held," she explained.

"So the idea you're going to hang on forever and a day to your traditional markets is a bit old-fashioned because you always have to have an eye on the competition."

© The Canadian Press, 2007