India's import of lentils from Canada has witnessed a slowdown in the wake of recent statements by Canadian Prime Minister Justin Trudeau linking India to an assassination that took place on Canadian soil. Trudeau asserted that Canada was actively pursuing credible allegations connecting Indian government agents to the murder of Khalistani terrorist Hardeep Singh Nijjar in British Columbia in June.
The allegations have raised concerns about potential trade restrictions as a result of deteriorating diplomatic relations between the two nations.
It is worth noting that Canada is a primary source of lentil imports for India. Any reduction in Indian purchases could potentially lead to lower prices for Canadian farmers during the harvest season. Simultaneously, it could result in increased domestic food prices in India.
India had previously imposed bans on wheat exports last year and non-basmati white rice this year to ensure staple supplies. The industry has expressed concerns about the possibility of trade restrictions imposed by the governments due to the current tensions.
Nitin Gupta, Senior Vice President of Olam Agri India, a major importer, conveyed industry concerns, indicating that trade restrictions might be imposed due to the strained relations. He told Reuters, "Industry officials are concerned that there could be trade restrictions by the governments owing to current tensions between the countries."
A senior Indian government official, choosing to remain anonymous, denied such plans, stating that India had not instructed importers to refrain from purchases. Nevertheless, tensions have led to India suspending the issuance of visas to Canadians, and both countries have expelled some diplomats.
In the meantime, officials from Canada's Global Affairs Department have indicated that Canada is not currently taking any direct actions that would impact trade with India.
Despite hesitancy among Indian buyers, global demand for lentils remains strong. Lentil prices are relatively high due to India's poor crop, but since Trudeau's comments, Indian offers for Canadian supplies have seen a 6 percent reduction to around $770 per metric ton, according to Kevin Price, Senior Export Merchant at Winnipeg-based crop trader Parrish & Heimbecker.
Canada played a substantial role in India's lentil imports during the 2022/23 fiscal year, accounting for over half of India's total lentil imports.
From April to July, India's imports of Canadian lentils surged by 420 percent year-on-year, reaching 190,784 tons, as per data from India's trade ministry.
With hesitation regarding Canadian lentils, Indian buyers are now exploring alternatives, such as lentils from Australia, to reduce their reliance on Canada.
"Inflation within the pulses group is currently very high, making Canadian lentils a critical need for India. Any measures taken to restrict imports would likely contribute to inflation, and New Delhi would likely avoid such actions," according to a Mumbai-based dealer quoted by the news agency.
