India and Canada see no impact on trade ties from diplomatic spat

India and Canada do not see diplomatic fallout over the murder of a Sikh separatist leader having any immediate impact on bilateral trade ties, government officials from the two countries said.

Canada exports primarily minerals, pulses, potash, industrial chemicals and gemstones to India and imports goods such as pharmaceuticals, marine products, electrical and electronic equipment, pearls and precious stones.

Relations 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.

India denied the accusations, describing them as part of 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 amounted to US$8.4 billion at the end of the last fiscal year on March 31, marginally up on the previous year, according to India's trade ministry.

The dispute started last year when Trudeau first accused India of involvement in Nijjar's murder.

"I want to reassure our business community that our government remains fully committed to supporting the well-established commercial ties between Canada and India," Canadian trade minister Mary Ng said in a statement late on Monday.

"We will work closely with all Canadian enterprises engaged with India to ensure these important economic connections remain strong."

In August, Canada exported US$279 million worth of goods to India and imported around US$324 million worth, a jump of around 14% in both categories from August last year, latest data showed.

Canadian funds, which have cumulatively invested over US$54 billion in India, are also not expected to change their stance 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.

Canadian police on Monday also accused India of using organised crime to target Canada's South Asian community and said they suspected the Bishnoi group, led by Lawrence Bishnoi, currently held in an Indian prison.

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