"The embassy has learned that foreign terrorists, possibly including members of al Qaeda, allegedly intend to carry out a series of bombing attacks in or around New Delhi and Mumbai over the next few days," spokesman David Kennedy told CBS Radio News. "We can't confirm it or whatever, but we thought it was prudent to issue this message at this time."
In an e-mail sent to American citizens living in India, the embassy warned the alleged attacks were believed to be planned around India's Independence Day, which falls on Aug. 15.
"This is a period ... where India is on a little bit higher alert in general," Kennedy said.
That was clear on the approach road to New Delhi's international airport, where guards armed with assault rifles stopped cars, buses and trucks, checking IDs and searching some vehicles.
In New Delhi, Indian Home Ministry officials said they had received no notice of a possible plot. Home Secretary D.K. Duggal even called the warning "innocuous," and said it was an internal embassy matter.
But an Indian official later said the intelligence upon which the warning was based came from the Americans, and that Indian security officials were looking into the matter. The official spoke on the condition of anonymity because the information was confidential.
Word of the alleged plot came a day after, possibly just days away, to blow up U.S.-bound jetliners over the Atlantic and kill thousands.
The U.S. Embassy's warning for India said the "likely targets include major airports, key central Indian government offices, and major gathering places such as hotels and markets."
"The embassy urges American citizens to maintain a low profile and be especially alert and attentive to their surroundings over the next four, five days," Kennedy said.
The Press Trust of India meanwhile reported that police in New Delhi had arrested two members of a Pakistani Islamic militant group suspected in a string of bombings in India, including last month's attacks on Bombay's commuter trains, which killed 207 people.
The news agency said the arresting officers believed they had foiled a terror plot by Lashkar-e-Tayyaba, which is based in Pakistan and believed to have ties to al Qaeda.
One of the two alleged Lashkar militants is Pakistani, and both were arrested late Thursday with 4.4 pounds of a powerful explosive known as RDX, and a huge quantity of other ammunition, PTI reported. They were nabbed at New Delhi's train station.
The Pakistani was identified only as Anaz, a native of Islamabad, and the other man as Abrar Ahmed, from the northern Indian state of Uttar Pradesh, PTI said.
Police officials were not immediately available to confirm the report.
Meanwhile, the benchmark index of the Bombay Stock Exchange, the 30-share Sensex, slipped more than 100 points, or 1 percent, as word of the U.S. Embassy warning spread. The losses were later recovered.
"Today, terrorism has made some impact, with all these warnings," Sushil Choksey at Rosy Blue Securities, a Bombay based brokerage, told the NDTV news channel.
India's emergence as a global economic power appears to have increased its attractiveness as a target for Islamic militant groups, more than a dozen of which are already battling New Delhi's rule over two-thirds of Kashmir, a predominantly Himalayan region split between India and Pakistan.
India has already been hit by three serial bombings in the past year — in New Delhi in October, in the Hindu holy city of Varanasi in March, and in Bombay on July 11 — and authorities here say Lashkar, working with homegrown militants, had a role in all three.