India on Monday announced withdrawing its high commissioner in Canada.
The escalation in the diplomatic row between India and Canada will not have an impact on the bilateral trade and investment ties between the two countries, government sources told PTI on Tuesday.
They also said that the bilateral trade value is not significant and Canadian funds route their investments through Singapore, the UAE and the US.
"India is a preferred investment destination," they said.
Canada is India's one of the primary sources of lentils and now that can come from Australia, they said, adding that Indian students and professionals would also have huge opportunities in different countries.
The bilateral merchandise trade between India and Canada grew slightly from USD 8.3 billion in 2022-23 to USD 8.4 billion in 2023-24.
India's imports from Canada increased to USD 4.6 billion, while exports saw a marginal dip, falling to USD 3.8 billion.
During April-July this fiscal, India's exports stood at USD 1.3 billion, while imports were at USD 1.37 billion.
Think tank Global Trade Research Initiative (GTRI) too has stated that the diplomatic tensions between India and Canada have so far not impacted the bilateral trade in goods between the two countries.
However, it added that as this dispute drags on, both nations will need to carefully manage their actions to avoid a full-blown economic fallout.
India on Monday announced withdrawing its high commissioner and other "targeted diplomats and officials" from Canada after strongly dismissing Ottawa's allegations linking the envoy to an investigation into the killing of extremist Hardeep Singh Nijjar, in a major downturn in already frosty ties between the two nations.
India's decision came shortly after the Canadian Charge d'Affaires Stewart Wheelers was summoned to the Ministry of External Affairs (MEA) and was told bluntly that the baseless "targeting" of Indian High Commissioner Sanjay Verma and other diplomats and officials was "completely unacceptable".
The strain started when Canadian Prime Minister Justin Trudeau accused India of involvement in the killing of a Canadian citizen and Sikh separatist leader.
This allegation led to a back-and-forth expulsion of diplomats and paused Free Trade Agreement (FTA) talks.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)