India blackouts are a double-edged sword
The massive power failures that left nearly one billion Indians in the dark earlier this week are being seen as both an opportunity and a concern for Canadian business as the Harper government tries to cosy up to the energy-hungry giant.
The Conservative government has been actively courting India as a major economic opportunity for Canadian industry.
Free trade talks have been moving along — albeit a bit slower than anticipated — while Prime Minister Stephen Harper and several of his ministers have led trade missions to India in an attempt to connect Canadian firms with prospective projects.
More than 500 Canadian companies already have operations in India, according to the Department of Foreign Affairs and International Trade, with more than $500 million invested in the Asian country in 2010.
At the same time, an unknown number of Canadian companies — including many of the largest banks — have outsourced some type of service to India, whether it be answering customers’ calls, administrative work or manufacturing.
While some of those firms may have been affected by two days of massive power failures that swept across India on Monday and Tuesday, it’s believed the impact was little more than an inconvenience for the majority of them.
Still, India is struggling to provide enough power to match its needs, a fact acknowledged by the Indian High Commission in Ottawa on Wednesday.
“India is galloping ahead on the development path and the demand for power has risen phenomenally,” Deputy High Commissioner Narinder Chauhan said in an e-mail. “We cannot meet this demand fully through our own resources. Energy security is a national priority.
Chauhan said that is why India has reached out to countries like Canada to try to help it address its energy needs, which are expected to grow over the coming years. The Harper government has also identified power generation as an area where Canadian know-how could be harnessed for commercial benefit.
Jean-Michel Laurin, vice-president of global business policy at the Canadian Manufacturers and Exporters industry association, said companies that work in the electricity generation and transmission sectors will be chomping at the bit to get into India now.
But for others like manufacturers who rely on stable energy supplies, it could be a turnoff. “It’s bad for business, obviously,” Laurin said. “Even though companies build contingencies for it, it’s still going to have a very big impact. So it’s a double-edged sword.”