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India's Prime Minister Narendra Modi (R) shakes hand with Canada's Prime Minister Justin Trudeau ahead of the G20 Leaders' Summit in New Delhi on September 9, 2023. (Photo by Evan Vucci / POOL / AFP) Image Credit: AFP

India rejected allegations by Prime Minister Justin Trudeau that its government agents were behind the assassination of a prominent Sikh leader in Canada and moved to expel a Canadian diplomat in a new low for ties between the two countries.

Hardeep Singh Nijjar, a Khalistan activist, was gunned down on June 18 outside a Sikh cultural center in Surrey, British Columbia. The Khalistan movement is banned in India, where officials see it and affiliated groups as a national security threat.

"Allegations of the Government of India's involvement in any act of violence in Canada are absurd and motivated," its Ministry of External Affairs said in a statement Tuesday.

Trudeau claims 'credible allegations'

Trudeau said there are "credible allegations" of India's involvement in the killing. "Canada has declared its deep concerns to the top intelligence and security officials of the Indian government," Trudeau said Monday in the House of Commons in Ottawa.

"Any involvement of a foreign government in the killing of a Canadian citizen on Canadian soil is an unacceptable violation of our sovereignty," he said.

Trudeau said he raised these concerns "personally and directly" with Indian Prime Minister Narendra Modi on the sidelines of the Group of 20 meeting last week in New Delhi.

Top diplomats expelled, summoned

Melanie Joly, Canada's foreign minister, said she expelled a top Indian diplomat, without giving further details. In a tit-for-tat reaction, India summoned the Canadian High Commissioner on Tuesday to relay a decision to expel a senior diplomat based in the South Asian country.

The festering ties threatens to derail plans for an early-stage trade deal. Both nations this year said they expected to agree to a trade pact by end-2023 but it was put on hold ahead of the G-20 summit. Canada last week postponed a trade mission to India in October.

Trade talks with Canada will continue to be on hold until "certain political developments" are resolved, according to a senior Indian government official.

While Canada doesn't even make it to India's top 20 trading partners, any breakdown in trade negotiations will be a blow to India that's trying to position itself globally as a supply chain alternative to China. In 2022, India had a $2.87 billion trade surplus with Canada.