Police in Delhi said they were investigating “an incident” but could not confirm an attack had taken place.
The Israeli embassy in London said there had also been an attempted attack on a diplomat in Tbilisi, Georgia, but an explosive device had not gone off.
Israel’s Delhi embassy is defended by several layers of security.
He said they had no details as to who could have been behind it and the police have not given them any further information.
Indian TV showed pictures of a burning car outside Israel’s Delhi embassy.
In later images, the fire was extinguished and the car could be seen burnt out.
The embassy is guarded by several layers of security and is in a well-defended area of central Delhi close to Prime Minister Manmohan Singh’s official residence.
Israel’s foreign ministry has condemned the attack and said that Israel had the ability to track down those who carried it out.
Police had cordoned off the scene. Forensic experts and members of the bomb disposal unit were examining the car.
Officials in Georgia said an explosive device was attached to the bottom of a diplomat’s car in the capital, Tbilisi, but was found and defused before it detonated.
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