Canadian Prime Minister Justin Trudeau announced last Monday that Canadian security agencies have obtained credible evidence indicating a connection between the Indian government and the murder of Hardeep Singh Nijjar, a Canadian citizen and a prominent advocate for Sikh separatism in India.

Two masked assailants shot Nijjar outside a Sikh temple in British Columbia earlier this year in an attack that Canada claims is linked to "agents of India." The Indian Ministry of External Affairs described the accusations as "unreasonable," leading to the expulsion of senior diplomats from Ottawa and New Delhi.

Javier Delgado, a researcher at the Canada Institute specializing in national security issues, states in a report published by the Wilson Center that the dispute has shed surprising light on the Canada-India relationship, which was moving in a positive direction before the Nijjar incident. Geopolitical developments, economic relations, and demographic trends over the past decade had paved the way for stronger ties between the two former British colonies. The rise of India in Canada's Indo-Pacific Strategy of 2022 and high-level negotiations between the two countries to reach an early advanced trade agreement had created significant optimism among supporters of the two nations' relations.

Now, the Indian government's accusation of orchestrating the assassination of a Canadian citizen in Canada has cast doubt over the future trajectory of bilateral relations.

Delgado suggests that trade is likely to be the primary sector affected by the dispute, as negotiations for the trade agreement will be suspended. The two countries announced a halt to their trade talks earlier this month. The negotiations were an important part of Canada's Indo-Pacific Strategy, which viewed the trade agreement as a crucial step towards establishing a broader comprehensive economic partnership that would enhance trade relations between the two countries. The suspension of trade talks places pressure on the $17 billion bilateral trade relationship.

Additionally, the decline in the flow of Indian immigrants, who recently represented about one-fifth of all immigrants to Canada, could prove to be more damaging than merely a deterioration in trade relations. In fact, Canada’s population growth, which is the fastest in the G7, is primarily attributed to immigration: four out of every five new Canadians from 2016 to 2021 were immigrants.

Indian immigration to Canada has tripled since 2013, with India surpassing the Philippines and China as the largest source of new Canadians according to the 2021 census.

Delgado states that in addition to impacting Canada-India relations, the dispute between the two countries could disrupt the new framework of institutions and alliances in the Indo-Pacific region. India, with its economic strength and security capabilities, has been praised by the United States and democratic allies as a regional counterbalance to China. Washington has included India as a founding member of the economic framework for the Indo-Pacific. Both countries are foundational members of the Quad Security Dialogue, a strategic alliance that also includes Japan and Australia.

Canada has not been invited to join the Quad Dialogue or the economic framework for the Indo-Pacific, nor has it been included among the members of the AUKUS security alliance.

Any strain in relations with India could hinder Canada's ability to join the network of Indo-Pacific institutions, as regional allies would be keen not to anger Modi's government, and India itself could prevent Canada from joining certain entities. Clearly, Canada is aware of India's influence and power in the region. The Canadian Indo-Pacific Strategy, published in 2022, includes a whole section dedicated to India, stating: "The strategic importance and leadership of India - in the region and the world alike - will grow as the largest democracy in the world becomes the most populous country and continues to grow its economy."

In any case, Canada will not be the only one losing due to this dispute. The accusations could damage India's global image as a democratic nation committed to a rules-based order or, more importantly, its perception as a reliable ally in the competition against China. The "Five Eyes" intelligence group, which includes Canada, may reassess its intelligence-sharing and law enforcement cooperation with India if Canadian officials reveal conclusive evidence of India's involvement in Nijjar's death.

Disagreements among allies are common and should be expected within a grouping of countries with different agendas that make up the new Indo-Pacific framework. Governments occasionally differ over trade policies, environmental practices, and other issues that do not pose a threat to their diplomatic relations. However, the disagreement between Canada and India is unique in that the severity of the accusations, the economic and demographic ties between the two nations, and the geopolitical context revealing the situation raise risks for all parties, including the United States.

In order to avoid damaging the emerging alliances in the Indo-Pacific as a result of the dispute, Washington will need to handle the situation with caution. Beijing stands to benefit the most from the internal conflict among America's key allies, but regardless of what developments the coming weeks may bring, Canada and India will continue to enjoy poor relations with China and good relationships with the United States. One reason for this is the values shared by the three countries. American leaders must remember this and remind Ottawa and New Delhi that the future path must be paved with justice and a commitment to due process: straying from those values could push relations among the three countries into an uncertain and volatile state.