A Navy spokesman said: "The Navy is on a high state of alert after getting this input."
The first tip off came from some school children at Karanja in Uran.
Maharashtra Director-General of Police Satish Mathur said two students had informed the police of sighting some suspicious men in Uran.
"While one student has claimed spotting one person, the other has claimed to have seen five. After this information, multiple agencies are probing it," Mathur said.
A defence spokesperson said that according to a report they received, early this morning, five-six persons in Pathani suits were sighted and appeared to be carrying weapons and backpacks.
The Western Naval Command reacted promptly by first sounding an alert and informing all coastal security agencies which are now on high alert in Raigad and the country's commercial capital, Mumbai.
"Searches and others actions as per procedures have been initiated. The situation is being closely monitored in liaison with the police. No person has been located or apprehended till now," the spokesperson said.
The news spread like wildfire in Uran and nearby areas, resulting in the closure of schools and colleges for the rest of the day.
The entire town of Uran went on a spontaneous shutdown as a precaution even as Navi Mumbai Police Commissioner, district police and Navy officers went to the spot to verify the students' claims.
A similar high alert was sounded in Mumbai with armed police taking positions at various points in south Mumbai, including near the Gateway of India and Girgaum Chowpatty.
All agencies concerned agencies are not taking the tip-off by the students lightly in view of last Sunday's terror strike in Jammu & Kashmir's Uri town, especially since the suspicious sightings have taken place near a naval training base in Uran on the mainland.
Besides, the entire region is highly sensitive in view of the close proximity of the Western Naval Command headquarters just across the harbour in Mumbai, the naval harbour, the Mumbai Port Trust, the Jawaharlal Nehru Port Trust, several critical installations like BARC and oil terminals, offices of important central and state government in a small radius.
The development brought back memories of November 26, 2008 when a group of 10 Pakistani terrorists had sneaked into Mumbai through the Arabian Sea route at Colaba and then created mayhem for 60 hours.
Much earlier, the sea route was taken for landing large quantities of arms and ammunition at various points on the Maharashtra coast which were used for carrying out the serial bomb attacks in Mumbai on March 12, 1993.
