Prime Minister Justin Trudeau on Tuesday said Canada was going through an "extremely challenging time" with India but asserted that Ottawa will continue to have "constructive relations" with New Delhi, amid the diplomatic row between the two countries over the killing of a Khalistani separatist.

Speaking to reporters in Ottawa, Trudeau also said that it's important for Canada to have diplomats on the ground in India, amid a report by London-based Financial Times that New Delhi wants as many as 41 of 62 remaining Canadian diplomats out of the country, the Toronto Sun newspaper reported.

"Obviously, we're going through an extremely challenging time with India right now," Trudeau was quoted as saying by the Canadian newspaper.

He, however, did not confirm the FT report that India has asked Canada to withdraw 41 of 62 diplomats from the country.

Asked if his government would retaliate by asking India to remove diplomats based in Canada, Trudeau insisted his government would try to keep working with New Delhi.

"We're not looking to escalate, as I've said, we're going to be doing the work that matters in continuing to have constructive relations with India through this extremely difficult time," Trudeau was quoted as saying by the state-run CBC News.

Tensions flared between India and Canada last month following Trudeau's allegations of "potential" involvement of Indian agents in the killing of Khalistani extremist Hardeep Singh Nijjar on June 18 in British Columbia. India angrily rejected the allegations as "absurd" and "motivated".

Nijjar was shot dead by two masked gunmen. India had designated Nijjar as a terrorist in 2020.

Last month, India asked Canada to downsize its diplomatic staff in the country, arguing that there should be parity in strength and rank equivalence in the mutual diplomatic presence. The size of Canadian diplomatic staff in India is larger than what New Delhi has in Canada.

India also asked Canada to come down hard on terrorists and anti-India elements operating from its soil and suspended visa services for Canadians.

External Affairs Minister S Jaishankar told journalists in Washington last week that the governments of India and Canada will have to talk to each other and see how they resolve their differences over the issue and underlined that the larger issue of "permissiveness" must be flagged and addressed.

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