Police were questioning several people on Tuesday in connection with a bomb attack that killed 10 people in Pune after viewing closed-circuit television footage, officials said.
However, Satyapal Singh, the police chief of Pune, declined to confirm media reports that 3-4 people had been taken into custody.
The bomb, which exploded in a bakery in Pune that is popular among Western and Indian tourists, contained ammonium nitrate and RDX, a powerful explosive used by the military, Singh told reporters.
"We have got some leads from CCTV footage and we are questioning many people," he said.
The Pune bombing was the first major militant strike in the country after the Mumbai attacks in November 2008 that killed 166 people and which were blamed on the Pakistan-based separatist group Lashkar-e-Taiba (LeT).
Senior internal security sources have told Reuters the focus of the Pune attack investigations has been on the LeT, and the Indian Mujahideen, a local militant group.
IM, a shadowy group which Indian officials and some experts say gets training and logistical support from LeT, is known to have operated a cell in Pune, an IT and educational hub about 160 km (100 miles) southeast of Mumbai.
India is seeking to interrogate David Headley, arrested in the United States last year and charged with scouting targets for the Mumbai attacks. India believes Headley, who also surveyed a religious retreat and a Jewish centre in Pune, has links to LeT.
On Monday, Indian Home Secretary G.K. Pillai said authorities had no doubt that terror strikes in the country were largely masterminded from Pakistan, but with regard to the Pune blast, he would wait until the investigations were complete.