The Indian navy announced that one of its warships in the Gulf of Aden destroyed a ship belonging to Somali pirates while patrolling 285 nautical miles (528km) south-west of Salalah in Oman, on Tuesday evening.
According to early reports, INS Tabar was approaching a pair of high-speed launches and a pirate 'mother ship' - used as a base from which to launch attacks.
An Indian navy spokesman said it demanded the vessel stop for investigation but the pirate ship responded by threatening to "blow up the naval warship if it closed on her".
The pirates, who were running around the decks with rocket-propelled grenade launchers and machine-guns, then attacked.
The Indians say they retaliated by opening fire and that there was an explosion on the pirate vessel, which sank.
"Fire broke out on the vessel and explosions were heard, possibly due to exploding ammunition that was stored in the vessel," the Indian navy said.
Some of the pirates tried to escape on two speedboats - the Indian sailors gave chase but one boat was later found abandoned, while a second boat escaped.
The Tabar has been patrolling the Gulf of Aden since October 23, and has escorted 35 ships safely through the "pirate-infested waters", the statement said.
Last week, helicopter-borne Indian marine commandos stopped pirates from boarding and hijacking an Indian merchant vessel.
Meanwhile, Al-Jazeera television broadcast footage of one of the pirates asking for a cash sum in exchange for the return of the Sirius Star tanker, its cargo and its crew of 25, including two Britons.
One of the pirates, Farah Abd Jameh, said: "Negotiators are located on board the ship and on land. Once they have agreed on the ransom, it will be taken in cash to the oil tanker."
He did not state the amount to be paid but added: "We assure the safety of the ship that carries the ransom. We will mechanically count the money and we have machines that can detect fake money."
The message came as two more ships were seized by Somali pirates in the past 24 hours: a Greek bulk carrier and a Thai fishing boat, despite a large international naval presence in the waters off their lawless country. An Iranian cargo ship was also hijacked earlier in the week.
