India-Canada Diplomatic Row: A Look At Impact On Investments Coming Into India

Diplomatic tensions between India and Canada reached new lows after India announced the expulsion of six Canadian diplomats, including the Acting High Commissioner Stewart Ross Wheeler, hours after recalling the Indian High Commissioner to Canada and some other officials from Canada.

The diplomatic feud is now threatening investments from the North American country, which was the nineth largest source of foreign portfolio investors at the end of September 2024, according to data available on NSDL.

Canadian public funds are also one of the largest investors in the Indian infrastructure sector, like roads and highways, telecom towers and real estate.

Foreign investors held a total asset under custody of Rs 1.98 lakh crore in equity alone at the end of September. They held little over Rs 36,000 crore in debt instrument at end of the same period.

The asset under custody for the Canadian investors have risen from Rs 1.50 lakh crore when the rift started exactly a year back in September 2023. At that time Canada was the seventh largest investor in the country by asset under custody. It held around Rs 27,000 crore in debt at that time.

The diplomatic rift between the two countries threatens to impact investment from some of the largest global pension funds based out of India.

• CPP Investment Board had over $11.5 billion investment in India at the end of March 2024. It recently invested as an anchor investor in the Hyundai Motors India IPO. It is also invested in Flipkart and Kotak Mahindra Bank Ltd.

• CDPQ is another large public fund which invests in India.

• OMERS or the The Ontario Municipal Employees Retirement System also invests into the Indian equities market. It held $986 million in investments at the end of June 2024.

• Ontario Teachers' Pension Plan has invested over $3 billion in India, including investments in National Highway InvIT, Mahindra Susten and Sahyadri Hospitals Group.

• British Columbia Investment made its first direct physical investment in India as co-investors in Tower Infrastructure Investment Trust (a Reliance Jio asset) and invested in Cube Highways Trust, a road asset platform. It also has a partnership with True North for private equities and with Quantum Advisors for public equities.

• Fairfax Financial Holdings Ltd. held investments across IIFL Holdings, Fairchem Specialty, Bangalore International Airport, Sanmar Chemicals Group, National Collateral Management Services, Catholic Syrian Bank, Saurashtra Freight, the National Stock Exchange, Seven Islands Shipping and Jaynix Engineering.

• Brookfield Asset Management Inc., an alternative asset management company, is focused on real estate, renewable power, infrastructure and private equity. It has a listed real estate investment trust in India and stake in the telecom infrastructure assets.

• Sun Life Financial Inc. is a joint venture partner in a Life Insurance Joint Venture with the Aditya Birla Sun Life Insurance.

In addition, Canada is the 17th largest foreign direct investor into India, investing over $3.95 billion between April 2000 and June 2024.

Bilateral trade between the two commonwealth countries stood at over $7.5 billion in 2023.