File Photo: Canada s Prime Minister Justin Trudeau and Indian Prime Minister Narendra Modi taking part in a wreath-laying ceremony at Raj Ghat in New Delhi. AP
Relations between Delhi and Ottawa deteriorated sharply two weeks ago when Canada raised the possibility of Indian government involvement in the assassination of Hardeep Singh Nijjar near Vancouver in June.
"In moments of tensions, because indeed there are tensions between both our governments, more than ever it's important that diplomats be on the ground," foreign minister Melanie Joly told reporters.
"And that's why we believe in the importance of having a strong diplomatic footprint in India."
She spoke after the Financial Times reported that Canada had been instructed by India to repatriate around 40 diplomats by October 10.
Joly would not confirm the report, saying instead that the dialogue with New Delhi was taking place "privately."
"We are in good ongoing conversations with the Indian government," she said.
Canadian Prime Minister Justin Trudeau described the situation as "extremely difficult."
"We're not looking to escalate. As I've said, we are going to be doing the work that matters in continuing to have constructive relations with India," he said Tuesday.
The Indian Ministry of Foreign Affairs also declined to comment on the report.
Describing Ottawa's accusations over the killing as "absurd," the Indian government has advised its nationals against traveling to parts of Canada and has temporarily stopped processing visa applications to Canada.
Michel Juneau-Katsuya, a former senior Canadian intelligence official, said Ottawa was under pressure to reveal its evidence behind the assassination claim.
"Canada is in a bad position because of Mr Trudeau's inaction," he told AFP.
Canada is home to some 770,000 Sikhs, with a vocal group voicing support for creating a separate state of Khalistan in India.
The Sikh separatist movement has largely dissipated within India where security forces used deadly force to put down an insurgency in the 1980s.