"It does vindicate India's longest-standing position that cross border terrorism behind disturbance created in Kashmir since last year. The outfits that Syed Salahuddin leads, they have perpetuated, from the territory of Pakistan and Pakistan-occupied Kashmir, cross border terrorism against India including in Kashmir for a number of years," foreign ministry spokesperson Gopal Baglay said welcoming the notification.
It also underlines that both India and US face threat of terrorism and "are working together to counter this threat, not in particular sector but globally also as terrorism knows no boundaries. Terrorism is a global menace", Mr Baglay added.
"In September 2016, Salahuddin vowed to block any peaceful resolution to the Kashmir conflict, threatened to train more Kashmiri suicide bombers, and vowed to turn the Kashmir valley "into a graveyard for Indian forces" said the US State Department in a statement, explaining the action.
The US move is seen to signal that the Trump administration will take a tougher stance on Pakistan harbouring terror groups.
New Delhi sees the specific mention of turning Kashmir "into a graveyard for Indian forces" as an unequivocal statement in India's support and a validation of India's moral authority on the Kashmir issue.
Monday's order would prohibit US nationals from engaging in transactions with Salahuddin. Also, all of Salahuddin's property and interests in property subject to United States jurisdiction are blocked.
A native of Budgam district in central Kashmir, Salaluddin had shifted to Pakistan-occupied Kashmir around 1989 from where he played a key role in fueling militancy in Kashmir for 27 years; training and arming youth before sending them back to the Kashmir valley. He also heads the United Jihad Council, the umbrella body set up in the mid-1990s to oversee terror outfits active in Jammu and Kashmir.
Addressing a public rally in Lahore last year, Syed Salahuddin had threatened Home Minister Rajnath Singh against travelling to Islamabad for the Saarc meeting of home ministers. Hafiz Saeed had followed up on this threat, with a statement announcing nation-wide protests against Rajnath Singh's visit.
It is not clear how the US order will impact the Hizbul chief who operates out of Pakistan-occupied Kashmir and has the support of the Pakistani government and its agencies. In 2014, the US had similarly placed the Pakistan-based Hafiz Saeed-run Jamaat-ud-Dawa in the list of banned foreign terrorist organisations.
Two years earlier, in 2012, the US announced a $10 million bounty for information leading to Hafiz Saeed arrest for his involvement in terrorist attacks, including the 2008 strike on Mumbai that killed more than 160 people, including six Americans.