Canada is not trying to provoke India by suggesting it was linked to the murder of a Sikh separatist leader, but wants New Delhi to address the issue properly, Prime Minister Justin Trudeau said.

Trudeau announced on Monday that Canadian intelligence agencies were actively pursuing credible allegations tying New Delhi's agents to the shooting of Hardeep Singh Nijjar, 45, in British Columbia in June, in a rare such attack on the world's largest democracy.

India quickly dismissed the assertion as absurd, and said it was expelling a Canadian diplomat, further worsening already poor diplomatic relations between the two G20 members.

In the wake of India's denial, Trudeau was pressured by the Conservative opposition to go public with the evidence he had.

Trudeau said on Tuesday that Ottawa decided to speak now because "we wanted to make sure that we had a solid grounding in understanding what was going on ... we wanted to make sure we were taking the time to talk with our allies."

He told reporters that the case had far-reaching consequences in international law.

"The government of India needs to take this matter with the utmost seriousness. We are doing that; we are not looking to provoke or escalate," he said.

The affair has derailed protracted talks on a potential bilateral trade deal.

A source familiar with the situation said Canada's decisions on Sept. 1 to pause the talks and on Sept. 15 to postpone a major trade mission set for next month, had been directly linked to concerns over the murder.

The source spoke on the grounds they not be identified, since they were not authorised to speak to reporters.

Canadian officials have so far declined to say why they believe India could be linked to Nijjar's murder.

The evidence "will all be shared in due course", said a senior Canadian government source, who requested anonymity given the sensitivity of the situation.

"The prime minister hasn't provided any facts. We need to have the evidence that allowed the prime minister to come to the conclusions yesterday," Conservative Party leader Pierre Poilievre told reporters.

Canada has worked very closely with the U.S., including on Trudeau's statement on Monday about his country's concerns over the killing, said the government source.