Some Indian social media users claimed the hoodie had imagery supporting the Sikh separatist movement.
The Canada-based singer said a fan threw it at him and he did not see what was on it before displaying it.
The issue of Sikh separatism is a sensitive topic in India.
The rapper - known to fans as Shubh - has previously been in controversies over the issue.
In September, hisIndia tour was cancelledafter a row over an old social media post where he had shared an incorrect map of India. He was accused of supporting the demand for Khalistan, or a separate Sikh homeland - which had led to a violent insurgency in India in the 1980s. At the time, he had asked his critics to "refrain from naming every Punjabi as a separatist or anti-national".
That row occurred soon after ties deteriorated between Delhi and Ottawa - Prime Minister Justin Trudeau said his country was investigating the potential involvement of Indian government agents in the murder of a Sikh separatist leader in Canada, an allegation India angrily denied.
Canada has the largest population of Sikhs outside India's Punjab state, and is home to popular Punjabi diaspora musicians such as Shubh.
The recent controversy began after Shubh's weekend concert in London - videos that began circulating on X (formerly Twitter) show him picking up a black hoodie from the floor and holding it up to the audience.
Critics said the hoodie showed the map of Punjab, along with a drawing of India's former prime minister Indira Gandhi being shot dead.
Gandhi was assassinated by her Sikh bodyguards in 1984, months after the Indian army stormed the Golden Temple, Sikhism's holiest shrine, in Amritsar to flush out separatist militants who were inside.
It's difficult to clearly establish the image on the hoodie from the hazy videos that are currently online.
On Tuesday, the rapper put up a statement as an Instagram story, where he said that "a lot of clothes, jewellery and phones were thrown at me by the audience at my first show in London".
"I was there to perform, not to see what got thrown at me and what is on it."
He has received support from fans who have shared videos from his other shows, where he can be seen picking up items thrown on the stage and displaying them to the audience.
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Popular Punjabi rapper Shubhneet Singh has asked people to stop spreading "hate and negativity" after a controversy broke out over a hoodie he held up at a concert in London.