An Indian journalist has been arrested in connection with last month's bombing of an Israeli diplomatic vehicle in New Delhi, authorities said today.
It is the first apparent breakthrough over the attack which Israel has accused Iran of orchestrating.
Though Indian authorities have not implicated Iran in the bombing, any leads which point in that direction could complicate India's delicate efforts to ward off growing Western pressure and maintain its strong economic ties with Tehran.
Energy-starved India remains a large market for Iranian oil, and those purchases could blunt the effect of intensified sanctions being imposed by the United States and European Union to force Iran to curb its nuclear ambitions.
Police arrested Syed Mohammed Kazmi after investigations showed he had been in touch with a suspect they believe may have attached a magnetic bomb to an Israeli diplomat's car, police spokesman Rajan Bhagat said.
Police said they searched Kazmi's house over the past two days to gather evidence which might link him to the February 13 attack, which injured the diplomat's wife, her driver and two other people in a nearby car. Police did not say what evidence they found.
Kazmi, 50, was being questioned and was scheduled to appear in court today before being handed over to officials of the investigating agencies for further questioning, Mr Bhagat said. It was not immediately clear which news organisations Kazmi has worked for.
The New Delhi blast came on the same day a bomb was discovered on an Israeli diplomat's car in the former Soviet republic of Georgia. The following day, three Iranians accidentally blew up their house in Thailand, and Israeli authorities said the similarity between their explosives and the two earlier bombs linked Iran to all three incidents.
Indian officials have refused to assign blame while the investigation continues.
Israel has accused Iran of waging a covert campaign of state terrorism and has threatened military strikes on Iranian nuclear facilities.
If Kazmi's arrest and interrogation leads to evidence of Iran's involvement - either directly or through its proxies - in the New Delhi attack, the fallout could put India in a diplomatic quandary.
Iran is one of India's major suppliers of oil, accounting for 12% of its energy needs.
So far, India has fended off criticism over its growing economic ties with Iran by saying it does not heed unilateral sanctions, such as those being imposed by the US and EU.
"We have accepted sanctions that are made by the United Nations," Foreign Secretary Ranjan Mathai told reporters in Washington at a recent press briefing. "Other sanctions do not apply to us."
Western sanctions have made it harder for Indian companies to pay for Iranian oil, with international banks unwilling to handle transactions from Tehran without breaching the new American sanctions on Iran's financial earnings from oil.
Last month, India and Iran agreed to an arrangement for 45% of the 11 billion dollars in annual oil payments to be made in Indian rupees, with the rest to be paid in a barter system.