Canada has listed India's Bishnoi gang as a terrorist entity, allowing the federal government to seize property and freeze money owned by the group in the country.

The federal public safety minister announced the move on Monday, saying the gang created a climate of fear and intimidation in Canadian diaspora communities.

Last year, Canadian police alleged that agents of the Indian government were using Bishnoi members to carry out "homicides, extortion and violent acts" and target supporters of the pro-Khalistan movement.

India denied the allegation at the time, saying Canada has not provided any evidence regarding them.

Along with giving the government the power to freeze or seize property and money, the new designation gives law enforcement in Canada tools to prosecute terrorist offences like financing, travel and recruitment.

"Specific communities have been targeted for terror, violence and intimidation by the Bishnoi gang," Public Safety Minister Gary Anandasangaree said in a statement.

"Listing this group of criminal terrorists gives us more powerful and effective tools to confront and put a stop to their crimes."

Canada describes the Bishnoi gang, run by Lawrence Bishnoi, a 32-year-old gangster from India who has been behind bars for a decade, as a transnational criminal organisation that primarily operates out of India.

It says the gang has a presence in Canada and is active in areas with significant diaspora communities.

In India, investigators allege Bishnoi continues to control a gang with 700 members involved in extorting celebrities, smuggling drugs and weapons and carrying out targeted assassinations.

The designation by Canada comes after pressure from opposition parties and provincial premiers in Alberta and British Columbia to do so, who have said it would permit the government to push back against the gang with various sanctions.

It also also comes as the two countries work to restore ties that were strained by the killing of a Sikh separatist leader, Hardeep Singh Nijjar, in a Vancouver suburb in 2023. Not long after, former Prime Minister Justin Trudeau accused the Indian government of involvement in the fatal shooting.

Nijjar, designated a terrorist by India in 2020, was killed by two gunmen outside a Sikh temple. Four men are currently facing charges in the killing.

In August, both countries appointed new high commissioners.

Then, last week, Prime Minister Mark Carney's national security adviser told reporters in Ottawa that India has committed to co-operating with Canadian officials in ongoing investigations.

The adviser, Nathalie Drouin, said she recently had a productive meeting with Indian officials, where they discussed respective security concerns and committed to non-interference, including refraining from transnational repression.