India's National Investigation Agency has arrested 10 people suspected of planning a series of bomb attacks on vital installations and crowded places.

The NIA carried out raids in the Indian capital New Delhi and nearby towns, and recovered large amounts of explosives, arms, ammunition and a rocket launcher, agency spokesman Aloke Mittal said.

Laptops, 112 alarm clocks, pipes, a suicide bomber's vest and more than 100 mobile phones, as well as $15,000 (750,000 rupees), were among the equipment also uncovered during Wednesday's raids.

A Kashmiri protester shows Islamic state flag as others clash with Indian policemen during a protest in Srinagar, Indian controlled Kashmir on December 7. (AP)

"We detained 16 people, and 10 have been arrested so far," Mittal said.

The members of the cell appeared to have been inspired by the Islamic State terrorist organisation, Mittal added.

Mittal said the leader of the cell was a 29-year old Muslim cleric, adding: "He had a handler outside the country."

The suspected members are aged between 20 and 30, and communicated through messaging apps WhatsApp and Telegram.

"The [cell] appears to have been set up three to four months ago," Mittal said.

He said their intended targets "included VVIPs [very very important persons] and crowded places" and that it was not possible to reveal further details at this stage of investigations.

"The level of preparation indicates they were planning to carry out explosions using remote-controlled [improvised explosive devices] and [suicide] attacks," Mittal said.