Canadian Prime Minster Stephen Harper's visit to India this month is expected herald a new era in Indo-Canadian relations, paving the way for a historic free trade agreement between the two countries. On invitation by Prime Minister Manmohan Singh, Harper's India visit, showcasing a closer relationship with the world's largest democracy, will also provide the Canadian leader a rare opportunity to maximize his global standing ahead of key summits next year. This trip to the Asian economic powerhouse could pay rich dividends for Canada's standing on the world stage as it prepares to host key summits in 2010 - the G8, and a G20 in Huntsville in July.

The Canadian Prime Minister, who will be accompanied by a high-powered business delegation, will be holding talks in New Delhi as well as in the other key cities of Mumbai, Chennai and Hyderabad where Canadian companies are active.

Canada has ramped up activities in India in the last few years, opening several trade offices in the hopes of boosting bilateral trade valued now at a relatively low level of $2 billion a year, which is far below the potential. "The footprint of Canada is very strong in India and it suggests that the government is building a foundation on which to really expand trade, which has been minimal," according to Harper's government.

Canada is being widely perceived to be a model of financial-sector regulation. While every other G8 country had to bail out a bank or prop up financial sector players in the last year, Canada and its banking system has continued to operate normally.

Against the backdrop of stagnating Indo-Canadian trade, Harper's visit may provide a turning point for bilateral relations, leading to conclusion of a series of trade-related deals, including nuclear commerce, which could pave the way for the first phase toward a free-trade agreement, providing for lower tariff barriers.

Although India is a fast-rising economic power, Canada is only its 26th-largest supplier of goods and services. Many believe New Delhi, courted for trade by many countries, has little interest in Canada.

However, in early October this year, India's Commerce Secretary Rahul Kullar met in Ottawa with Trade Minister Stockwell Day and other officials and signalled that after years of little progress, Delhi wants real advances in trade with Canada.

A long-awaited deal on investment, an agreement on energy exchanges, and an accord that allows Canada's nuclear industry to sell to India are expected within about a month, he said, along with a green signal to start the long process toward a broader free-trade agreement.

Since the start of this year there have so far been six federal ministerial visits paying the way for increasing trade ties. At least some of those agreements, like an accord for greater co-operation on energy exchanges, are expected to be signed during Harper's visit.

Last year, Ottawa shifted long-standing policy and backed India's move to join the world's civilian nuclear trade even though it had used Canadian nuclear technology to develop nuclear weaponry. Harper government ministers trooped to the subcontinent, but advances were slow.

Now India, seeking to diversify its trade after the recession hit big markets such as the United States and Europe, is prepared to move aggressively, indicated Khullar. He said he wants to approve a batch of trade-related agreements as a signal of change.

A long-delayed bilateral investment protection agreement is down to one or two minor points, he said. A memorandum of understanding on developing energy ties is essentially completed.

Bilateral Trade
The total bilateral trade between India and Canada from January till November 2008 stood at US$ 3956 million registering a 21.45 percent increase over the corresponding period last year. During the period, India's exports to Canada increased by 11.6 percent and imports from Canada by 32.4 percent over the same period last year.

Major items of India's exports to Canada during January-December 2008 were garments, diamonds and jewellery, rice, hosiery, chemicals, cotton, marble and granite, medicines, electrical equipment, carpets, etc.

Major items of India's imports from Canada included potash, pulses, newsprint, wood pulp, communication equipment, ores, asbestos, diamonds, machinery, scrap, etc.

India's exports to Canada during the first half of current fiscal registered a decline of 12.64 percent from the same period in 2008. India's imports from Canada during the same period showed a much larger decline, 21.53 percent. Bilateral trade in the first six months of 2009 registered a 16.8 percent decline over the same period last year.

Trade sources say that more ground needs to be covered if Canada-India Free Trade Agreement has to be initiated. Harper's visit would just be a facilitator in the process.

Improved Competitiveness Rankings
In the recent World Economic Forum Global Competitiveness Rankings, India and Canada were positioned at higher levels, both among only five countries with positive national competitiveness prospects in the wake of present global recession. In the rankings on 8 September 2009, Canada took 9th spot in the Forum's Global Competitiveness Index, up from 10th in 2008, 13th in 2007, and 16th in 2006. In three years Canada moved past the U.K., South Korea, Hong Kong, Norway, the Netherlands, Israel and Iceland. India rose one spot to 49th spot, behind 48th ranked Italy, moving ahead of Lithuania. Amongst the countries that India outranks in the index are Brazil, Hungary, Romania, Greece, Mexico, Turkey, and Russia.

India's position was aided with an improvement notably in its foreign market size ranking to 4th, and innovation ranking to 30th, and its continued strong rankings in financial market sophistication 16th, and business sophistication 27th, quality of management schools 15th, and quality of math and science education 22nd, and availability of scientists and engineers 4th, also stand out. India has also seen notable improvement where it has been challenged, notably macroeconomic stability a subcategory in which it rose to 96th from 109 (out of 133).

Also notable were the findings of the recent survey of selected (16) macro and business economists from the Forum's Global Agenda Councils. Asked to rate the degree the present global recession will have a positive or negative effect on selected countries, the survey found only in five countries that the experts believe competitiveness will improve. From most improved to least the rankings were Brazil, India, China, Australia, and Canada.