I've tried to rank these tips in order of most to least important.
outland process
95% of all applicants for permanent residency in Canada for a spouse will want to use the so-called "outland" process, whereby the application is sent to Mississauga and then on to the visa office in the sponsored spouse's country of origin (or residence).
The process of applying through the "inland" process, the "within Canada" route, may seem like the obvious choice. But it's not. It's a much longer process, and if you're denied you can't re-apply. And by "much longer" I mean 15-36 months compared to 4-6 months. The "inland" route has a special use that makes it inapplicable for most Canadians. A good explanation can be found here.
once your application is sent
After your application is sent via the "inland" process, this is what happens:
- The office in Mississauga will eventually open your application. During this time you will hear nothing from them. Calls to the call centre will not help. During this time, your online status on the CIC website will not be updated.
- Your application will be reviewed for completeness. If you've forgotten to sign something, the application will be returned to you. This can take quite some time.
- If your application is complete, the sponsor will be evaluated. Once you are approved, you will either receive an email or a letter stating that you are approved. That letter also states that it is proof of receipt of the funds you've paid for the application. Lastly, it indicates that the application package has been forwarded to the visa office in the spouse's country.
- The visa office in the foreign country will then likely issue an acknowledgement of receipt of the application. This will either come as an email or as an update to the online status.
- If all goes well, the visa office will issue a request for the sponsored spouse's passport. Get this in the mail to the visa office promptly. (see the note below)
- The visa office will put a permanent residency visa in the passport and return it.
- The usual next step for Canadians who live close to the border is to cross into the USA and ask for an administrative rejection. This is a form of exclusion from the US that does not turn up as a blot on your record; instead it merely records the fact that you asked not to be admitted to the USA and that you'd like to return. This can take a couple of hours.
- Once you're turned back from the US, you present your PR visa to the agent at Canada Border Services. You will then go through the "landing" procedure.
- After this, you'll be admitted to Canada as the country's newest PR, and you'll receive a card in the mail. That's the end of the process.
passport requests
Some visa offices can ask for the sponsored party's passport very quickly. There are two reasons for this: some offices, like London, Tokyo, and Beijing, are very quick to process applications–these offices ask for the passport at the end of the process but the end comes quickly; some offices request the passport at the outset of the process, not the end.
The following is a quote from "Charlie10D", a contributor to CanadaVisa.com.
Some offices, especially in southeastern Asia, request the passport as part of the processing and NOT in order to issue the visa. The decision to issue the visa is not yet made when those offices request the passport from applicants. Part of it is for security reasons.
[Berlin] is NOT one of those that requests the PP before they are ready to issue a visa.
submitting your application by courier
Couriers have been known to refuse to deliver to a post office box. The address in Mississauga for the application process centre is a post office box.
The following quote comes from "jamacanincanada" on CanadaVisa.com:
if you are sending the package via courier (UPS, DHL, FEDEX etc) you should use the following address:
2 Robert Speck Parkway,
Suite 1200
Mississauga, ON
L4Z 1H8

It sounds like you applied via the inland process? That seems to take much, much longer, but at least you don't run the risk of needing an interview in New Delhi. All the best to you!
This system's a grim screwy one. My colleagues were amazed that people are now going to lengths such as giving birth in bathtubs to get around the denial of health insurance during The Long Wait.
http://www.cbc.ca/news/canada/story/2012/02/24/bc-motelbaby.html
Some info on the expiry of Canadian PR cards, for those who need it:
http://www.cic.gc.ca/english/information/pr-card/index.asp
Best of luck. Join one of the forums where you can discuss current events with other people going through the process. You'll find plenty from India, for instance.
I don't know what a "demand draft" is, but if you've already paid them certainly you should have a receipt of some sort to forward them?
Now the processing time in New Delhi stats almost 10 months. Its way too long. We already miss each other so much. now she is having vacation of one month from her job. She wants to come back to India for a month. Will it affect our Spousal Application if she returns to India for a month?
Perhaps your wife should call the CIC help line and ask them?