In the video posted online, al Qaeda chief Ayman al Zawahri promised to spread Islamic rule and "raise the flag of jihad" across the "Indian subcontinent". The 55-minute video which announces the creation of the group called "Qaedat al-Jihad in the Indian Subcontinent" was posted on social media outlets including You Tube.
The government believes the video is authentic; it has asked the Intelligence Bureau (IB) to verify details like where the video was uploaded within a day or two.
In it, Zawahiri singles out Assam, Gujarat and Kashmir -- states with large Muslim populations -- along with Bangladesh and Myanmar, as territories targeted by the new organization.
The video speech makes two references to Gujarat, the home state of Prime Minister Narendra Modi, long considered a target for Islamist militant groups because of the communal riots which took place during his first term as chief minister of the state in 2002. More than 1,000 people, mainly Muslims, were killed.
"In the wake of this al Qaeda video, we will be on a higher alert. We will work closely with the central government to tackle any threat posed to the state," SK Nanda, the most senior bureaucrat in the home department of Gujarat, told news agency Reuters. A high security alert in the state involves activating informer networks in sensitive areas.
The timing and content of the video suggests rivalry between al Qaeda and its more vigorous rival in Syria and Iraq, Islamic State, which anecdotal evidence suggests is gathering support in South Asia.
Intelligence officials say that in recent months, there have been reports that some members of the Indian Mujahideen, who are based in Pakistan, are now showing signs of breaking away from Mujahideen and are affiliating with Al Qaida.
Mujahideen founder Yasin Bhatkal, who was arrested last year by India, has allegedly confirmed this to interrogators.
The Indian Mujahideen was launched in India by the Pakistani terror group Lashkar-e-Taiba and is responsible for some of the worst recent terror attacks in recent years in the country.
A recently-released video by this breakway group of the Mujahideen shows one of its leaders, Sheikh Armar, originally from Hyderabad, talking about fighters being trained in Afghanistan and then being sent to India.
New Delhi: The union government has ordered several states to be on increased alert after al Qaeda announced it has formed a wing in India and its neighbourhood.