If the Indian market is so large to and from Canada, why doesn't Air Canada muscle in on it more effectively either on its own or with code share partners, thereby negating Emirates advantage instead of whining on about how unfair it all is?
Maybe they know they cannot compete cos they are a basket case.
The economic advantage to Canada would be the spending power the additional passengers will bring to the regions served. They will either be boosting the local economy spending money whilst staying with friends and rellies, or spending money if it is Canadians going to India to visit family as to turn up empty handed without plenty of gifts isn't acceptable.
As for this strange belief that only a Low Cost operator would stimulate additional demand, it simply isn't the case. With competition there is normally a healthy adjusting of the normal fares to try to ensure that passengers don't migrate to the new entrant to the market. This benefits existing customers who might fly more frequently if the offer was good enough, and attracts others who were unable to justify the expense before. Load Factor v Yield has to be managed aggresively but it should result in more money not less.
Of course if you are unused to this sort of commercial pressure because you have been unfairly protected by a stubborn government and unions then it is probably not within your capabilities to adapt.