At least eight people were killed in an explosion in a car near the historic Red Fort in a densely populated district of the Indian capital Delhi, a city police spokesperson said.

The exact cause of the blast was being investigated, city police spokesperson Sanjay Tyagi said. However, India's financial capital of Mumbai as well as its most populous state of Uttar Pradesh, which borders Delhi, went on high security alert after the blast, local media reported.

"Eight people have been killed in the explosion," Tyagi said. At least 20 people were injured, TV channels reported, as ambulances raced to the scene.

Mangled bodies and the wreckage of several cars could be seen on a congested street near a metro station in the old quarter of Delhi, as police poured into the area to secure it and push back gathering crowds.

Delhi Police Commissioner Satish Golcha said the blast took place minutes before 7.00 pm (1330 GMT).

"A slow-moving vehicle stopped at a red light. An explosion happened in that vehicle, and due to the explosion, nearby vehicles were also damaged," he told reporters.

"The situation is being monitored," he added.

At least six vehicles and three auto-rickshaws caught fire, Delhi's deputy fire chief said later, adding that the flames had been doused by firefighting teams.

"We heard a big sound, our windows shook," one resident who did not give a name, told NDTV.

The Red Fort, known locally as Lal Qila, is a sprawling, 17th-century Mughal-era edifice melding Persian and Indian architectural styles, and is visited by tourists throughout the year.

The prime minister addresses the nation from the fort's ramparts every year on August 15, India's independence day.