Ontario's exports to India a meagre $400M

Amit Dave/Reuters

A customer holds a BlackBerry handset at a mobile phone shop in the western Indian city of Ahmedabad.

Christine Dobby  Jun 24, 2011 – 2:34 PM ET | Last Updated: Jun 24, 2011 2:35 PM ET

Ontario’s meagre exports to India show the province needs to be more aggressive in pursuing trade with the key emerging market, says CIBC World Markets Inc.’s deputy chief economist.

Despite India’s booming economy and the fact that Ontario produces many of the goods and services in high demand there, the province’s companies export just $400-million a year to the country, Benjamin Tal said in a research paper Friday.

Mr. Tal said Ontario’s focus on trade with the United States, long a reliable and lucrative trading partner, meant it overlooked other markets. With the current state of the global economy, however, the province needs to diversify its trade portfolio.

“India should obviously be a top priority in this shift, given the size and rapid growth of the Indian economy and the many cultural and other links between the two jurisdictions,” he said.

Ontario has not yet capitalized on the surging development in India, where the middle class is expected to expand by about 300 million people by 2025, which Mr. Tal said will quadruple consumer spending in the next two decades.

While trade between India and Ontario has grown in the past five years, increasing by 39% to $1.6-billion annually, the trade balance clearly favours India, which exports about $1.2-billion to Ontario.

Mr. Tal said recent government efforts to strengthen ties with the nation are positive but the responsibility still lies on Ontario companies to adopt a more aggressive approach to winning business in the country, where GDP has grown on average 6.5% a year for the past 20 years.

Canadian companies also seem to be missing out on opportunities to invest in India through acquisitions, according to a PwC report also released Friday. It found that Canadian-led deals accounted for just 7% of Canadian acquisitions in BRIC (Brazil, Russia, India and China) markets.

The share of Canadian direct investment in India was just 0.1% in 2010, a figure that has not changed in the past 20 years, Mr. Tal pointed out.

“While Canadian corporations were looking elsewhere to invest their dollars, others were looking at India as a land of opportunity, pumping in US$37.9-billion last year, up from US$22.7-billion, or 67%, in just the last five years.”

In terms of possible growth areas, Ontario engineering, architecture and design firms should pursue opportunities created by India’s need for infrastructure investment, while the province’s mining financing expertise would lend itself easily to India’s growing demand for resources, Mr. Tal said. With many Indian students looking for education abroad, Ontario schools also stand to benefit from stronger pursuit of business in the country.