The recent India-Canada diplomatic strain has affected startups severely. The diplomatic tensions may become a source of worry for Indian entrepreneurs who vouch for Canada as a gateway to North American markets.
Canada plays a prominent role when it comes to trading and entrepreneurship. Canadian start-up visa provides access for Indian startups to pave their way to the North American markets. It helps immigrant entrepreneurs in taking their business to a global level.
The Canadian start-up visa provided enticing incentives for entrepreneurs. Due to the suspension of visas, businesses have started exploring alternative potential markets around the United States.
The India-Canada Rift
The ties between both countries are strained due to Canadian Prime Minister Justin Trudeau’s statement that suggested that there was Indian involvement in the assassination of a Canadian citizen, Hardeep Singh Nijjar, a Sikh separatist leader. Both the countries expelled a diplomat in retaliation amidst which India denied the allegations. The conflict majorly revolves around the Khalistan movement which was previously banned in India.
What is a Canada Startup Visa?
Canada’s Startup Visa allows any foreign entrepreneur to obtain permanent residence in Canada through business immigration. Enterprising owners of startups or established foreign companies may be able to use this program to permanently relocate to Canada along with other founding partners (up to 5 partners), provided that they meet other requirements.
Canada Startup Visa Numbers
Entrepreneurs made less use of the Startup Visa (SUV) in the first quarter of this year than they did for the same period last year. Even though there was an upward trend in immigration to Canada, there was a downfall in the number of SUVs used by the permanent residents of the country. It was down by 6.25%, slipping from 160 in the first quarter of 2022 to 150 this year.
The monthly number of new arrivals through the immigration program dropped to 40 after starting with 50 new immigrant entrepreneurs through the SUV in January.
Indian Startups in Canada
Canadian accelerator and incubator Toronto Business Development Centre (TBDC) has announced plans to help Indian startups and micro, small, and medium-sized businesses to globalize their companies.
On average, 96,000 new startups are formed in the Canadian economy per year
TBDC predominantly offers a six-month-long incubation program for startups in three distinct phases. In the first phase, they provide a three-month pre-arrival virtual training to Indian startups and entrepreneurs giving them a comprehensive understanding of the Canadian business market.
Canada Pension Plan Investment Board (CPPIB) has made investments in several Indian start-ups including Delhivery, Flipkart, Paytm, and Byju’s. According to Tracxn data, CPPIB has a 3.6% stake with a cumulative investment of Rs 292 crore in Acko. In Byju's, it has a 3.4% stake with cumulative investments of Rs 1,456 crore. In Flipkart, its cumulative investments stood at Rs 6,663.50 crore.
The political turmoil between the two nations should hopefully be resolved soon. If not then it will continue to have an adverse affect on the startup funding.
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