India has “disengaged” from trade talks with Britain after accusing it of failing to condemn the Sikh extremist group that attacked the Indian High Commission in London last month, The Times reported on Monday, citing British government sources.

The incident occurred on March 19, when protesters with 'Khalistan' banners staged a demonstration at the High Commission and took down an Indian flag from the building's first floor balcony to denounce recent police action in Punjab.

"Indians don't want to talk about trade until they get a very public demonstration of condemnation of Khalistan extremism in the UK," a Whitehall source told The Times.