That would be the ultimate show of weakness by Canada. India stops all visas for Candians. Canada launches evisa for Indians. But the way things are progressing now, this is probably how it will most likely play out.
Thing is, the way Canadian politics is setup right now, Trudeau is trying to save his chair. For that he needs Jug-Meat : A Sikh head of NDP. Jug-Meat can not annoy Sikhs. Now if Sikhs find that their fellow sikhs from Punjab can not get visas, they will go absolutely ape.
They do not like Modi, alright but then Modi gives 2 flying fluffs about it. He is never going to get any votes out of Punjab anyways.
But if Canada blocks their Visas the shit is going to hit Jug-Meat and hence Trudeau. This is why Trudeau is not escalating. He can not escalate.
Modi also knows this, so he is taking full advantage of this while burnishing his own strong man creds in Indian politics. There is no bigger strongman street creds in Indian politics than one being putting a "white" "enemy" down.
Many Hindu nationalists who hate "moderate" politicians of India, absolutely love Indra Gandhi -- leader of the same moderate group. Because she stood up to American and outplayed them with the help of Russia in 1971. They love it. If modi does the same, he will be popular even beyond his death.
The biggest mistake Canada has done is that it has invited extremely complex, dirty and deadly Indian sub-continental politics in Canada. There are many reasons as why this has happened but there are ways to suppress this. Chief among that is concept of separation of state and chruch as it happens in USA. Canada does not enforces this. US for instance, forced out several official and politicians from the "Rajneeshi" cult who were trying to control politics of a district IIRC. Canada should do the same. One should not be able to control riding and provincial politics by virtue of local temple and Gurudwara level politics. There should a clear firewall between freedom of religion and political freedom. One should not be able to control the other.