Pune Police Joint Commissioner Rajendra Sonawane said that the explosion could be a bomb blast as the area is frequented by tourists specially foreign nationals.
"It is a suspected bomb blast. However, it is still not confirmed," said Sonawane after saying that eight people have died in the explosion.
At least 33 people have been injured in the blast and have been taken to hospitals. The entire bakery was engulfed in flames and several fire tenders were rushed to the spot.
"We are verifying the nationality of the dead. The injured have been admitted to Sasoon, Jahangir and Inlack Budharani hospitals," said Sonawane.
Maharashtra Chief Minister Ashok Chavan said that the blast was not as a result of a liquefied petroleum gas (LPG) cylinder explosion as has been reported earlier.
"Earlier it was known to be a cylinder blast but preliminary investigation shows that the cylinders are intact. The state Home Minister is at the spot. So far eight have died. It is too early to determine the nationality of the dead," said Maharashtra Chief Minister Ashok Chavan.
Union Home Ministry sources said that they suspect a terror angle in the blast because of the severity of the explosion.
Union Home Secretary G K Pillai said that a team of National Investigative Agency (NIA) officials is being sent to Pune along with a Central Bureau of Investigation (CBI) forensic team.
Pillai also added that the explosion is most probably a terror attack.
Officials suspect the explosion to be a bomb blast because the bakery is close to a Jewish centre, Chabad House, in Koregaon area of Pune.
Maharashtra ATS officials have already arrived at the spot to help in the investigation.
Initial reports had said that an LPG cylinder had exploded.
The area, situated near the Osho Ashram, is very popular with both foreign tourists as well as residents of Pune.
Bomb blast in Pune. Source : CNNIBN
