NT senator Jacinta Nampijinpa Price said she did not believe she had anything to apologise for after claiming the Labor government "allow those in that would support their policies", pointing to the Indian diaspora.
The senator's effort to bolster her argument had undermined the nation's non-discriminatory immigration policies and risked eroding public trust, Sikh Association of the Northern Territory president Harpal Singh told AAP.
"She has taken a dig, but it has lasting impacts," he told AAP.
"She should at least apologise, people make mistakes right?
"But the problem is the timing."
Violent and widely condemned anti-immigration rallies around the nation have stoked debate about Australia's immigration policy.
"Just after those protests, saying something like this, it just alienated people from Indian ethnicity," Mr Singh said.
"It's a shame."
A former president of the Indian Cultural Society of the Northern Territory says the NT senator's comments do not reflect widely held views.
"I don't know what motivated her to pick a particular community group ... it might have been that her thoughts were misdirected or she wasn't advised properly," Bharat Desai told AAP.
Picking on particular groups for political purposes was nothing new but can still cause harm, he said.
"There is always a bit of angst," Mr Desai said.
But he said Indians in Australia should not have to worry.
"Just go about doing your good job you've been doing for so many years for this country and contributing," Mr Desai said.
Opposition Leader Sussan Ley did not support the senator's comments.
"I'm fighting for every single Australian, no matter where you came from, and our Australian Indian community are amazing," Ms Ley told Sky News on Thursday.
Multicultural Affairs Minister Anne Aly told parliament social cohesion would remain fragile "as long as we treat people with gritted-teeth tolerance instead of mutual respect".
The government has released a forecast of 185,000 migrants for the year, not including temporary migration such as international students.
Senator Price said party discussions were ongoing about that figure.
"This is an issue that we will form a position on at a later point," she said.
But migration is no longer the fertile ground for political point-scoring it might have once been.
Migration expert Anna Boucher told AAP people were more likely to vote on the basis of class than ethnicity.
"When the population is so multicultural, a lot of people are going to take offence at a suggestion that the migration policy is driven by race, when we've had a non-discriminatory program since the 1970s," the University of Sydney associate professor said.
Migration-based politics is only ever likely to win a small proportion of votes.
"And as the population shifts it's going to become less and less acceptable," A/Prof Boucher said.
"It actually is a good thing, it shows that we're maturing as a multicultural political society."
