How Canada’s restrictions on Indian students may lead to billion-dollar losses to its economy

Canada has been a top choice for international students in the past, especially from India, with more than 320,000 Indian students joining Canadian institutions in 2022 as per official data. This high influx of international students contributes hugely to Canada’s economy. However, growing diplomatic tensions between Canada and India may disrupt this valuable income stream.

New immigration rules from the Canadian government are expected to cause a significant financial setback for post-secondary education in the country. A report by the International Consultants for Education and Fairs (ICEF) Monitor estimates Ontario alone could lose CDN$1 billion over the next two years.

While Indian students, the largest group among international applicants, will feel the effects, Canada itself risks significant financial losses due to anticipated declines in international enrolment. Among the changes, the Canadian government has implemented measures to control the number of international students. 

These include a federally enforced limit on enrolments, leading to a 35 per cent drop in new study permits for 2024, with a further 10 per cent reduction planned for 2025. This policy will even cover master’s and doctoral applicants from 2025 onwards, adding more constraints.

Indian students are key players in Canada’s education sector, with 2022 seeing a 47 per cent increase in Indian study permit holders, totalling over 319,000. Their economic contributions are substantial, yet numbers have begun to decrease. By August this year, only 137,445 Indian students had been issued study permits, a four per cent drop from the previous year.

Currently, approximately 600,000 Indian students are in Canada, including recent arrivals, based on official data. This number, however, could drop further.

Many Canadian universities rely heavily on international tuition fees, which are typically three times higher than those for domestic students. A reduction in Indian enrolment may lead to economic challenges in various areas. Indian students boost local economies, supporting businesses such as accommodation, food, retail, and transport.

Declining enrolment affects more than university budgets; it could compel institutions to cut programmes and services, impacting employment in the education sector.

The economic role of international students in Canada is significant. According to a Global Affairs Canada report, international student spending contributed CDN$30.9 billion to Canada’s GDP in 2022. 

This rapid growth has been a major asset to Canada’s post-secondary institutions, with economic contributions from students doubling from CDN$15.5 billion in 2016 to CDN$37.3 billion in 2022. This upward trend might have continued in 2023 had new restrictions not been put in place.

(With inputs from agencies)