Why India is miles behind China in trade with Canada, ask Kam Rathee

By Kam Rathee

TORONTO: Much ink has been expended on comparing two Asian giants, China and India, in these recent years and catchy nick-names have been coined to describe them.

Some call India the lumbering elephant and China the leaping dragon. Others call India the tortoise and China the hare. Still others call both of them Asian tigers.

However, none of these coined names fit the bill. There is no comparison between the two and it is foolish to even make one. Apples and oranges may be compared as both belong in the fruit category. But in reality, China and India are not even the same material. One is stone and the other wood or whatever you wish to call it. Hence, any comparison is futile.

When the two PMs met in Toronto in June 2010

In terms of their relationship with the rest of the world, let us look at the case of Canada. No doubt, Canada-India trade of a little over $5 billion is niggardly compared to Canada-China trade of almost $70 billion. There are many reasons for this state of affairs.

Let me list some of these reasons and see whether things can be changed.

The first reason is that China has been open to business with Canada and the outside world since the seventies, while India got out of the gate only in the 90s. Hence China has got a leg up on India.

My second point is the weak Canadian brand in India. Canada is the last among many  strong suitors of India. These include the US, Britain, France, Germany, Russia, Australia, etc. They have been dealing with India much longer and familiar with the terrain.

Thirdly, Canada’s nuclear misunderstanding with India in the early 1970s was a blow to our nascent business and political relationship. But in the case of China, ticklish issues such as human rights and the freedom of the people have not become much of a damper on developing its trade with Canada.

Fourthly, the Chinese government plays an active, strategic and strong role in business development through state-owned or regulated companies. The Chinese central leadership is able to take quick decisions in countering any bottlenecks to business expansion and trade, whereas India’s democratic set-up does not allow effective decision-making. India’s laissez-faire approach is no comparison to the Chinese strait- jacket approach.

Canadian Prime Minister Stephen Harper and his wife enjoying a Bollywood dance in Mumbai during his November 2009 trip to India. (Photo courtesy The Canadian Press)

Fifthly, Canadian business people, who are used to – and comfortable with – doing business next door with the US, are leery of the tough Indian business terrain. High-level corruption cases, flip-flop on regulatory decisions and inconsistencies in application of corporate laws (the Vodafone decision) have not done India’s image any good. Not that China does not have high-level corruption or other corporate ills. But that country doesn’t get so much negative press as its authoritarian regime manages to suppress bad publicity.

Finally, there is an impression that the Indian corporate world lacks transparency as most Indian companies are family owned and thus lack corporate governance. However, with time and as they get involved in international acquisitions, I am sure this area will improve.

Based on the fable that slow and steady wins the race, maybe India the tortoise will overtake China the hare as an economic superpower by the year 2030. But at present, China certainly has Canada’s attention and this is not likely to change.

(Kam Rathee is a former president of the Canada-India Business Council. In the top picture, he is seen in the middle talking to former Canadian high commissioner in India David H. Malone)