I want to test my application on iPad mini screen in Xcode 8.2, but I could not find the simulator for the same.
I have also tried to add simulator Hardware > Device > click bottom add menu but here I do not see any option to download the iPad mini simulator.
There is no separate iPad mini Simulator; the characteristics of the mini are identical to the 9.7" iPad.
edit: To clarify, we always match the number of pixels for the device you are simulating. At 100% Scale (in the Window menu) we make those virtual pixels match your Mac's PPI. If you have a retina screen and you're simulating a 2x retina device then each Mac retina pixel maps 1:1 to a simulated device pixel.
In no case do we try to make the on-screen Simulator have the same physical device size. If you run the iPad Air 2 simulator at 100% scale and put a ruler up to the screen you will see that it isn't 9.7" diagonal because the Mac doesn't have the same screen PPI. A Retina MacBook Pro has 220 pixels per inch. An iPad Mini 4 has 326 pixels per inch. An iPad Air 2 has 264 PPI. If we made the window physically 7.9" or 9.7" then we'd have to scale the virtual image down to fit.
So the answer is the same: use the iPad Air or iPad Air 2. If we did have an iPad mini simulator it would be identical and indistinguishable from the 9.7" iPad simulators.
edit: My original answer is slightly out of date now. We added a "Physical Size" option that checks your Mac's PPI and the simulated device's PPI then figures out the on-screen size required to match the physical dimensions. That matches the size of the 9.7" iPad, not the iPad mini.
There is not currently a way to trigger "Physical Size" for the iPad mini.
To test apps for the iPad mini in the simulator, run your app on a simulated iPad with the corresponding type of display, either Retina or non-Retina, depending on the iPad mini model. developer.apple.com