That rift is now raising questions over the impact it could have on the deep trade and immigration ties between both countries.
Bilateral trade is worth billions of dollars, and Canada is home to nearly 1.7 million people of Indian origin.
Trade ties between the two, meanwhile, remained as usual.
Bilateral trade is around $8bn (£6.15bn), according to the latest fiscal figures from India’s trade ministry.
Canada’s trade minister recently assured business owners that Ottawa does seek to disrupt commercial ties with India.
Diplomatic relations reached unprecedented lows following a shocking accusation this week from Canadian officials that they think agents of the Indian government were involved in a campaign of extortion and murder in the nation.
The impact that divide may have on the close immigration and trade relations between the two nations is currently a matter of concern.
Canada is home to approximately 11.7 million people of Indian descent, and bilateral trade is valued at billions of dollars.
This kind of relationship breakdown is unprecedented, and experts advise that a lot of what follows will depend on their decision-making going forward.
Although neither nation has enacted tariffs or other economic retaliation, analysts warn that this might change and that a cooling of relations between India and Canada could impede future economic expansion.
Arif Lalani, a senior advisor at government consulting firm StrategyCorp and a former Canadian diplomat, told the BBC that uncertainty would be the biggest challenge, especially for businesses and citizens.
A bilateral trade agreement between the two nations has been in the works for more than ten years, but Canadian negotiations were put on hold last year just before Prime Minister Justin Trudeau made his first public charges against India.
Sikh separatist Hardeep Singh Nijjar was shot and killed in Surrey, British Columbia, in June 2023. According to “credible allegations” that Canada had, Nijjar was killed by Indian government agents. Trudeau made this claim in September 2023.
Soon after, Canada’s citizens could no longer obtain visas from India; however, this action was only temporary, as visa processing was resumed in November.
Meanwhile, trade relations between the two continued as before. As per India’s trade ministry’s latest fiscal figures, bilateral trade amounts to approximately $8 billion (£6.15 billion).
Business owners were recently reassured by Canada’s minister of trade that Ottawa does aim to sever commercial ties with India.
Businesspeople from both nations may still search abroad for opportunities due to the continued unpredictability, according to Mr. Lalani.
He predicted that people would “be thinking twice” about trying to increase trade or improve what they already have.
How the rift will affect cross-border travel by people is another major worry. Approximately 4 percent of Canadians are of Indian descent, and India has been the country’s top source of international students since 2018.
Karan Thukral, a Delhi-based lawyer, told the BBC that “the human connection between our countries is profound” and that many of his clients are eager to immigrate to Canada.
According to him, a lot of people are currently concerned about how the diplomatic standoff would impact their plans to work or study in Canada.
Mr. Thukral stated that immigration processing is still ongoing, but he has cautioned his clients to expect possible delays because of the decrease in diplomatic personnel in both nations.
The reintroduction of visa restrictions by India for Canadian citizens has alarmed some, he continued, particularly those in Canada who have family there.
Per Jeff Nankivell, president of the Asia Pacific Foundation of Canada, any restrictions on visas would have ramifications for business and could inhibit investment, trade, and tourism.
The largest effect will be felt in Canada’s sizable Indian diaspora, he added, adding that “the Indian government has already shown its willingness to suspend the visa issuance once, so it’s possible they could do so again.”.
As Canadian police pursue legal action against those allegedly complicit in Mr. Nijjar’s death and other criminal acts, Mr. Nankivell expressed his suspicion that the diplomatic situation will continue to change and that the consequences will last for a very long time.
He predicted that the temperature would rise further.
It is still unknown whether or how the four Indian nationals in their 20s who have been detained and charged in relation to Mr. Nijjar’s death are related to the Indian government.
There is currently no scheduled date for their trial.
This week, Canadian police announced that there are “many ongoing investigations” into claims that agents of the Indian government were involved in “serious criminal activity” in Canada.
Sharply criticizing Delhi for its alleged aggressive meddling in Canada’s sovereignty, Trudeau escalated his charges against India on Wednesday.
However, he issued a warning as well, saying he didn’t want to sever social or economic ties.
“We don’t want to be in this position of picking a fight with a significant trading partner, with whom we have long-standing relationships and are fellow democracies,” Trudeau stated in response to a public inquiry concerning foreign meddling in the nation.
Angrily, India retaliated, denouncing as “cavalier” Trudeau’s actions and accusing Canada of lacking proof to support its claims.
India stated earlier this week that it “reserves the right to take further steps” in response, and Mélanie Joly, Canada’s foreign minister, stated that all options, including sanctions, are on the table.
Jessica Murphy in Toronto provided reporting for this article.
