A powerful bomb was found on Thursday from near a pharmacy in the crowded Imphal market complex locally known as Khwairamband in Manipur.
The bomb hidden in a bag was later defused by the bomb squad personnel, official reports said.
The police said an unknown person came to the market to buy medicine from a pharmacy shop owned by W Ranbir on Wednesday and left the bag with the bomb in front of it.
Ranbir, when opened the shop this morning, thought someone forgot his bag. A letter was found inside his shop saying "Warning Ranbir" and "the bag before your shop contains a bomb".
He immediately informed the police who later recovered the bag with the bomb.
Investigations have been continuing on the identity of the person who placed the bomb in a tight security area.
Shop-owners and women vendors protested the incident and appealed to the militants not to do so in a crowded area, the police said.