According to a BBC special report, UK authorities investigating the MQM for alleged money laundering were told by a Pakistani source about the alleged Indian connections of the party.
The Pakistani official said that India has trained hundreds of MQM activists over the last 10 years in explosives, weapons and sabotage in camps in north and north- east India.
Reacting to the report, the Indian High Commission in London said: "The BBC report on India training MQM members is completely baseless. Shortcomings of governance cannot be rationalised by blaming neighbours."
The MQM has also refused to comment on the report. British authorities held formal recorded interviews with senior MQM officials who told them the party was receiving Indian funding, the BBC reported.
The claims follow the statement of a senior Karachi police officer Rao Anwar that the arrested MQM militants were trained by India's external intelligence agency RAW.
The UK authorities started investigating the MQM in 2010 when a senior party leader, Imran Farooq, was stabbed to death outside his home in north London.
In the course of those inquiries Scotland Yard found around 500,000 pounds in the MQM's London offices and in the home of MQM leader Altaf Hussain, prompting a second investigation into possible money laundering. Husain has lived in self-imposed exile in the UK for more than 20 years.
He was given a British passport in 2002. A number of MQM officials, including Hussain, have been arrested in relation to the money-laundering case but no-one has been charged.
The party insists that all its funds are legitimate and that most of them come from donors in the business community in Karachi.
With 24 members in the National Assembly, the MQM is a dominant force in the politics of Pakistan's largest city, Karachi.
The party enjoys huge support in Pakistan's Mohajir community - the Urdu-speaking Muslims who migrated from India during the 1947 partition.