It is the first major incident since the attack on Mumbai in November 2008 and the finger of blame is being pointed at Pakistani-sponsored terrorist groups.
The German Bakery was a popular spot with tourists in the western Indian city and two foreigners were among the dead.
It is believed the bomb exploded when a waiter discovered an unattended backpack and tried to open it.
One of India’s leading security analysts, Commodore Uday Bhaskar, says the cafe could have been chosen because it was a “soft target”.
“This is a very popular spot with foreign tourists,” he said.
“It is also a very soft target and to that extent I think they have again demonstrated vigilance and the fact that they will not hesitate to carry out an attack against [a] very, very vulnerable and a very soft target.”
The attack has put India on edge. A high alert has been issued across the country and security has been stepped up in most major cities.
There are particular concerns about an attack on the nation’s capital, New Delhi.
Commodore Bhaskar says the attack is a reminder that the threat of terrorism is ever present.
“Given the size and intensity of the terrorist challenge that India faces, the question that many people ask [is], ‘when is the next Mumbai?’,” he said.
“And I think in many ways we have the answer in Pune.”
Finger of blame
Already there is mounting suspicion that Pakistani-backed groups, such as Lashka-e-Toiba and its Indian offshoot, the Indian Mujahideen, were behind the attack.
Security analysts say there is good reason for the suspicion. A week ago Lashka-e-Toiba’s leadership named Pune as a possible target.
It has also been discovered that alleged Lashka-e-Toiba operative David Headley, who is under arrest in the United States, had conducted reconnaissance on possible targets in Pune.
But at this stage India’s home secretary, GK Pillai, is playing down these possibilities.
“The forensic investigations have just begun [and] until the forensic investigations are completed, we will not know,” he said.
There is also widespread speculation the attack was timed to overshadow high-level diplomatic talks between India and Pakistan, scheduled for later this month.
Terrorism is to be the major topic of discussion. The blast has increased the political pressure on the Indian Government to get tough with Pakistan.
India’s main opposition, the BJP, has called for the talks to be scrapped but Mr Bhaskar says it is in India’s best interests for them to go ahead.
“It would be desirable to keep these talks going so that India and Pakistan have an official line of communication whereby they can discuss what they would deem appropriate under the official channel,” he said.
“These are not issues that can be addressed or redressed through the media.”
In the meantime, the pressure is on India’s recently expanded security agencies to find those responsible for the Pune blast.