India sees no impact on Canada trade ties from diplomatic spat, govt source says

India does not see the diplomatic fallout with Canada over the murder of a Sikh separatist leader having any immediate impact on bilateral trade ties, a government source said on Tuesday, a day after Ottawa linked some Indian diplomats to the crime.

Relations between the countries worsened after Canada on Monday linked India's high commissioner and other diplomats to the murder of Sikh leader Hardeep Singh Nijjar on its soil and accused New Delhi of a broader effort to target Indian dissidents in Canada.

A mural features the image of late Sikh leader Hardeep Singh Nijjar, who was slain on the grounds of the Guru Nanak Sikh Gurdwara temple in June 2023, in Surrey, British Columbia, Canada September 18, 2023. Reuters

India denied the accusations, describing them as part of Canadian Prime Minister Justin Trudeau's "political agenda".

"We are not immediately concerned about trade ties. Our bilateral trade with Canada is not very large," the source told reporters, speaking on condition of anonymity.

"We expect (Canadian) funds to make investment decisions based on returns and India offers attractive returns at the moment."

Bilateral trade between India and Canada had increased to $8.4 billion by the end of the last fiscal year on March 31 from $8.3 billion the previous fiscal year, according to India's trade ministry.

This was despite the row between the countries that started last year when Trudeau first accused India of involvement in Nijjar's murder.

India's imports from Canada include minerals, pulses, potash, industrial chemicals, and gemstones.

Canadian funds, which have cumulatively invested over $54 billion in India, are also not expected to change their stance on the country as a result of the ongoing row, the source added on Tuesday.

More than 600 Canadian companies have a presence in India in sectors including IT, banking, and financial services, and more than 1,000 companies are actively pursuing business in the Indian market, according to the Indian foreign ministry.

The Royal Canadian Mounted Police (RCMP) on Monday had also accused India of using organized crime to target its South Asian Community and named the Bishnoi group, led by Lawrence Bishnoi - currently lodged in an Indian prison - in this regard.

Bishnoi's lawyer said the matter would be probed by investigation agencies, adding: "Whatever is there, it will be revealed".