The ceremony took place in the Vatican in the presence of tens of thousands of worshippers from all over the world.
Recalling in his homily the life of the new saint, who threw herself on to a bonfire to escape a forced marriage so she could enter a convent, the Pope said she had been "an exceptional woman, who today is offered to the people of India as their first canonised saint."
Her feet were badly burned and she was ill for the rest of her life but praised for her compassion and stoicism.
She had lived in "extreme physical and spiritual suffering," the Pope said.
She "was convinced that her cross was the very means of reaching the heavenly banquet prepared for her by the Father.
"May we imitate her in shouldering our own crosses so as to join her one day in paradise."
"This canonisation is very important to us, especially in this moment, when we are persecuted in India," said Sister Ceelia, a member of the same Franciscan Clarist order as the new saint, who was born Anna Muttathupandathu, known as Alfonsa dell'Immacolata Concezione.
The order was founded in the southwestern region of Kerala in 1888.
"Unfortunately, there is always violence where there is love," the sister added.
Sister Ceelia was one of thousands of Indians, many of them priests and nuns, who had come to Rome from the region of Trivandrum, capital of Kerala.
Recent violence
India's Christian minority, making up little more than two per cent of the population, has felt particularly threatened in recent months.
Attacks by Hindu extremists on Christians in the eastern Indian state of Orissa have left 35 people dead since August.
Tens of thousands have fled and hundred of houses and dozens of churches been burned down. Benedict XVI has condemned the violence.
"Groups of criminals and mercenaries attack us because we give education to the low class people so they make no use of their services," said Sister Teresa, another member of the order.
Others to be canonised included the Ecuadorian Narcisa de Jesus Martillo Moran (1832-1869), Swiss nun Maria Bernarda Buetler (1848-1924), a missionary in Colombia and Italian Gaetano Errico (1791-1860) from Secondigliano, in the Naples region.
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(Source: ABC)