The feud, which has now extended to the expulsion of diplomats from both countries, is putting at risk investments from Canadian financial institutions, including some of the largest pension funds. Canadian investments in Indian markets stood at Rs 1.77 lakh crore, including Rs 1.5 lakh crore in equity markets, at the end of August 2023, according to NSDL.

The diplomatic friction between the nations has aggravated over the murder of a Sikh leader and has threatened to put a freeze on growing economic ties, including a free trade agreement that was to be concluded by the end of the year.

Some of the key Canadian pension funds have large investments in Indian companies involved in banking, real estate, and infrastructure projects.

CPPIB and CDPQ are among the largest investors in equity and foreign direct investment in the country.