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Amid continuously deteriorating ties, External Affairs Ministry spokesperson Randhir Jaiswal said a Canadian report claiming Prime Minister Narendra Modi was aware of the plot to kill Sikh separatist Hardeep Singh Nijjar was a "smear campaign".
Canada's Globe and Mail newspaper report quoted unnamed Canadian officials to say Mr Modi was aware of plot to kill the Khalistani activist. The report claimed the Indian national security advisor and the external affairs minister were also in the loop of the plot.
In response, Mr Jaiswal said, "Such ludicrous statements made to a newspaper purportedly by a Canadian government source should be dismissed with the contempt they deserve. Smear campaigns like this only further damage our already strained ties."
Khalistani terrorist and Canadian citizen Hardeep Singh Nijjar in Vancouver in June last year, kickstarting a diplomatic crisis after Canadian Prime Minister Justin Trudeau accused "agents" of Delhi of being involved. He claimed "credible information" had been shared with intelligence partners, including the US.
Last month, Canada linked Indian High Commissioner Sanjay Verma and some other diplomats to the murder. The Canadian government had said the Indian diplomats were expelled from the country. In a tit-for-tat move, New Delhi expelled Canadian Charge d'Affaires Stewart Wheeler and five other diplomats.
"I think it is obvious the Government of India made a fundamental error in thinking they could engage in supporting criminal activity against Canadians, here on Canadian soil. Whether it be murders or extortion or other violent acts, it is absolutely unacceptable," Mr Trudeau said.
Nijjar - the mastermind behind banned terror outfit Khalistan Tiger Force - was on Delhi's list of 'most wanted' terrorists for multiple crimes, including the murder of Hindu priest in Punjab. Anti-terror agency NIA had offered a Rs 10 lakh reward for information leading to his capture.