Canada said Thursday it had withdrawn 41 diplomats from India as a result of the fallout from a bitter dispute over the killing of a Sikh separatist on Canadian soil.

New Delhi planned to revoke diplomatic immunity for all but 21 of Canada's diplomats and their families by Friday, forcing Ottawa to pull out the others, Foreign Affairs Minister Melanie Joly said.

"We have facilitated their safe departure from India," Joly added. "This means that our diplomats and their families have now left."

Relations between India and Canada have plunged since Prime Minister Justin Trudeau last month publicly linked Indian intelligence to the killing of Canadian citizen Hardeep Singh Nijjar, allegations New Delhi has called "absurd".

Nijjar, who advocated for a separate Sikh state carved out of India, was wanted by Indian authorities for alleged terrorism and conspiracy to commit murder.

"Revoking the diplomatic immunity of 41 diplomats is not only unprecedented, but also contrary to international law," Joly said Wednesday, but added Canada did not plan to retaliate in kind, so as to not "aggravate the situation."

"Canada will continue to defend international law, which applies to all nations and will continue to engage with India," she said.

India's foreign ministry said in a statement that the government's pressing for a reduction in Canada's diplomatic presence was within "international norms".

"The state of our bilateral relations, the much higher number of Canadian diplomats in India, and their continued interference in our internal affairs warrant a parity in mutual diplomatic presence," it added.

Canada has called for India to cooperate in the investigation but New Delhi has rejected the allegations and taken countermeasures, such as shutting down visa services for Canadians.

Ottawa also expelled an Indian diplomat over the affair.

'Badgering the Canadians'

Indian External Affairs Minister Subrahmanyam Jaishankar said last month in New York that his country would be willing to examine any evidence presented by Canada.

"We have actually been badgering the Canadians. We've given them loads of information about organized crime leadership which operates out of Canada," Jaishankar said, referring to Sikh separatists.

"We have a situation where actually our diplomats are threatened, our consulates have been attacked," he added.

The Indian government has called the accusations over the killing "absurd" and advised its nationals not to travel to parts of Canada "given the increase in anti-Indian activities."

New Delhi also temporarily stopped processing visa applications in Canada.

Nijjar, who immigrated to Canada in 1997 and became a Canadian citizen in 2015, was shot dead by two masked assailants in the parking lot of a Sikh temple near Vancouver in June.

Canada is home to some 770,000 Sikhs, who make up about two percent of the country's population, with a vocal minority calling for creating a separate state of Khalistan.

The Sikh separatist movement is largely finished within India, where security forces used deadly force to put down an insurgency in the state of Punjab in the 1980s.

Hundreds of Sikh protesters rallied outside Indian diplomatic missions in Canada last month, burning flags and trampling on pictures of Indian Prime Minister Narendra Modi.

Tensions between Ottawa and New Delhi have created a delicate situation for close Canadian ally Washington, which is seeking closer ties with India in a bid to limit Chinese influence in the region.