Should I pursue my MBA in Canada from a mediocre university (like McMaster or UBC), or should I get into a new IIM (Shillong, Udaipur, etc.) in India if I ultimately want to settle down in Canada?

If you have already decided to settle abroad, investing your time and money in the new IIMs is useless. You should start looking for the top B Schools in your preferred country. Moreover, the IIMs, even the older ones, have a non-existent international scope. 

So why invest so much money in something that will not improve your chances of settling abroad? To make it easier I have listed a few Canadian Business Schools that are the most preferred ones.

1. University of Toronto
2. University of Western Ontario
3. York University
4. University of British Columbia
5. McMaster University

It’s amazing that you have been shortlisted for 2 of these amazing universities. I suggest you go for them instead of IIMs.