Rising tensions between India and Canada are unlikely to rock investments by storied Canadian institutions as market experts call the current diplomatic skirmish a "superficial and temporary" setback.
"Investors are savvy. They understand that politics and business are different," Nirmal Jain, founder of India Infoline Group, told BQ Prime. "India is a robust democracy with consistent policies, he said "There has been a significant flow from Canada and I don't see that impacted."
Canadian pension funds like CPPIB and CDPQ are some of the largest institutional investors in Indian companies and projects across sectors like energy, infrastructure and banks. According to National Securities Depository Ltd. data, the North American nation's financial institutions have invested Rs 1.77 lakh crore in the domestic market—with nearly 85% in equities alone.
India expelled a Canadian diplomat in a tit-for-tat move after Canadian Prime Minister Justin Trudeau alluded to the role of "agents linked to Indian government" in the killing of Hardeep Singh Nijjar, a Canadian citizen and Sikh separatist leader. India has denied the allegations.
The action is more political due to domestic compulsions of the Canadian government, says market expert Ajay Bagga. "We don't see this spreading and we don't see any impact of this on Indian investments."
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