OTTAWA, Oct 30 (Reuters) - Canada's deepening dispute with India over its alleged campaign of violence against Sikhs in Canada could intensify Indian-based cyber espionage and hold back immigration, but analysts and experts see no immediate impact on trade.
Concern about a widening rift between the two countries comes after a senior Canadian official told a parliamentary national security committee on Tuesday that Indian Minister of Home Affairs Amit Shah, a close ally of Prime Minister Narendra Modi, was the mastermind behind the alleged plots.
While Indian officials dismissed the official's statement, the disclosure might worsen a dispute that started a year ago when Prime Minister Justin Trudeau cited credible evidence linking Indian agents to the June 2023 shooting of Sikh leader Hardeep Singh Nijjar in British Columbia.
In response, Canada expelled six Indian diplomats earlier this month, accusing them of involvement. Four men have been charged with his murder.
The Canadian signals intelligence agency that monitors foreign-based cyber threats said New Delhi was most likely already conducting threatening cyber activity against Canadian networks for spying purposes.
"As Canada and India potentially may have some tensions, it is possible that we may see India want to flex those cyber threat actions against Canadians," Caroline Xavier, head of the agency, known as Communications Security Establishment Canada, told a Wednesday press conference. The agency has previously described India as an emerging threat.
On the diplomatic front, Ottawa is unlikely to take more punitive steps until more details of the Nijjar case emerge, said Vina Nadjibulla, vice president of the Asia Pacific Foundation of Canada think tank.
Cabinet ministers are due to testify about the matter to the national security committee and the murder trial of the four men has yet to start, she noted.
"If there are charges laid in the process on individuals that are living in India at whatever level, then it would trigger an extradition process which could take years. And of course, India is unlikely to cooperate," she said.
Officials working for Trudeau and Foreign Minister Melanie Joly did not respond to requests for comment about what steps Ottawa might take next.
India is the top source for temporary foreign workers and international students coming to Canada but a backlog of applications has built since Trudeau's allegations last year.
Canada only has four immigration officials left in India, down from 27 in October 2023. This affects Canada's ability to process visas on-site, Immigration Minister Marc Miller said.
"I have told my colleagues in Parliament that this could get worse before it gets better, and they need to brace for it," he said in an interview last Friday.
That could mean fewer people traveling between the countries for legitimate reasons, he said.
India is Canada's 10th largest trading partner and New Delhi has made clear it does not want flows to be hit. Nadjibulla's foundation carried out a study showing Trudeau's statement in October 2023 had little or no effect on bilateral trade.
"Whether that would be the case now I think it's a bigger question mark, because the disruption is on a bigger scale, and we are still not, I don't believe, at the bottom of this," she said by phone.
Canada is the biggest exporter of pulses, such as lentils, to India. Pulse Canada President Greg Cherewyk, asked about the potential impact of the diplomatic dispute, cited the strength of the relationship.
"In a time of stubborn food price inflation and strong demand for pulse crops, we are confident that affordability and availability will continue to drive decision-making at a government level," he said in a statement.
"We have thankfully not seen the political tensions affect trade," said Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance. "India and Canada have great potential in their trading relationship and CAFTA hopes we can work back to positive trade discussions."
