I had the same doubt in mind... but after asking a lot of people including Air India, Air Canada i found some details regarding this ....
As per UK Border Agency Website, Transit Visa is not required if : (basically called as DATV exemptions)
1. The stopover at UK is less than 24 hrs
and
2. UK is a part of your journey and u have a confirmed onward journey ticket
and
3. You have a valid visa for your final destination (which is Canadian TRV)
and
4. Nationals of India may use this administrative concession code (TWOV) if they possess a valid Canadian Visa
So, basically we dont need direct airside transit visa, however i still have one doubt in mind :
Do we need to reclaim the checked luggage at London Heathrow and Check in again for next flight
OR
There is a possibility of Through Check-in where the luggage reaches directly to the final destination and there is no need for pickup at London Heathrow airport.
Sadly, None of the Air India customer executives were able to answer this
And if we need to pickup the luggage again then i think we need to clear the customs area as well (Not sure, since london heathrow map is bit complicated and confusing)
Anyone who has travelled in past through the same route can surely help !!!
Anyone, pls guide for this route INDIA > LONDON HEATHROW (stopover for 5 hours) > CANADA