India had earlier rejected Justin Trudeau's charges as "absurd".
India and the US have discussed the killing of a Khalistani terrorist that is at the core of the Indo-Canada diplomatic crisis. Foreign minister S Jaishankar told his US counterpart Antony Blinken that Canada harbours extremist elements.
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Mr Jaishankar said Canadian Prime Minister Justin Trudeau's allegation - that "Indian government agents" were involved in Hardeep Singh Nijjar's killing - was not consistent with India's policy. India had earlier rejected Trudeau's charges as "absurd".
Canada has a "permissive attitude towards terrorists, extremists, and people who openly advocate violence", said the foreign minister, responding to a question during a discussion at Hudson Institute in Washington. "They have been given operating space in Canada because of the compulsions of Canadian politics," he said.
Trudeau has offered no evidence to support his allegation against India, but reports said this was a shared information among an intelligence alliance also including US, UK, Australia and New Zealand. Rejecting the charge, India has accused Canada of providing safe haven to terrorists.
Blinken said the US is concerned over the Canadian PM's allegations and they have been in close contact with the country. "We have engaged with the Indian Government and urged them to work with Canada on investigation," he said, adding that those responsible need to be held accountable.
For India, Canada has been a country where "organised crime from India mixed with trafficking in people, secessionism, violence, terrorism," said Mr Jaishankar in his latest criticism. "It's a very toxic combination of issues and people who have found operating space there." He also underlined that Indian diplomats are unsafe in that country.
Mr Jaishakar reiterated that India is open to taking a look if Canada has something specific. He said the doors for looking at something are not shut, but there must be something to be looked at. "If there is a requirement for us to look at something, we are open to looking at it. But, I then expect somewhere, some pointer, something for me to look at," he said.
This is not the first time Mr Jaishankar has criticised Canada for providing shelter to extremist forces, Indian diplomats facing threats and Indian consulates being attacked. India has been sending information across about organised crime leadership operating in Canada and there were a large number of extradition requests, he had said.
On Thursday, Trudeau pitched for building closer ties with India stating that the country is a growing economic power and an important geopolitical player. "As we presented with our Indo-Pacific strategy, just last year, we're very serious about building closer ties with India," he said.
Tensions had been brewing between the two countries since Prime Minister Narendra Modi scolded Trudeau over rising secessionist activities in Canada, during a bilateral meeting on the sidelines of G20 summit in Delhi. In 2018, India had reportedly handed him a list of nine Khalistani operatives.
The tension deepened after Trudeau alleged an Indian role in the killing of Hardeep Singh Nijjar, a designated terrorist in India who had moved to Canada and taken up their citizenship. India reacted sharply and the two countries expelled one diplomat of the country each to trigger a bigger crisis.