The ship's operator confirmed it had been boarded by Iranian authorities.
Of the 25 crew members aboard the container ship seized by Iran's Revolutionary Guards off the UAE coast on Saturday, 17 are Indian, sources have said.
The container ship, MSC Aries, was seized near the Strait of Hormuz by carrying out a "heliborne operation", and it is now headed towards the territorial waters of Iran, the country's state-owned IRNA news agency reported.
A source said, "We are aware that Iran has taken control of a cargo ship 'MSC Aries'. We have learnt that there are 17 Indian nationals onboard. We are in touch with the Iranian authorities through diplomatic channels, both in Tehran and in Delhi, to ensure the security, welfare and early release of the Indian nationals."
The ship's operator, the Italian-Swiss group MSC, confirmed it had been boarded by Iranian authorities. "We regret to confirm that MSC Aries owned by Gortal Shipping Inc which is affiliated to Zodiac Maritime, and chartered to MSC, has been boarded by Iranian authorities via helicopter. She has 25 crew onboard, and we are working closely with the relevant authorities to ensure their wellbeing, and the safe return of the vessel," the company told NDTV.
The US has called for the ship's immediate release. "We call on Iran to release the vessel and its international crew immediately. Seizing a civilian vessel without provocation is a blatant violation of international law, and an act of piracy by the Islamic Revolutionary Guards Corps," said National Security Council spokeswoman Adrienne Watson.
The seizure of the vessel comes amid heightened tensions in the Middle East. There are apprehensions of an attack on Israel by Iran, which has vowed retaliation for an airstrike on the consular section of its embassy in Syria's Damascus almost two weeks ago. Seven people, including, two generals were killed in the airstrike.
Iran has said that the vessel is "related to the Zionist regime (Israel) in the Gulf". Two websites that track shipping traffic, vesselfinder.com and marinetraffic.com, said MSC Aries is a Portuguese-flagged container ship and its last reported position was in the Gulf.
"A container ship named 'MCS Aries' was seized by the Sepah (Guards) Navy Special Forces by carrying out a heliborne operation," the IRNA agency reported.
The operation, it said, was carried out "near the Strait of Hormuz" - between the Persian Gulf and the Gulf of Oman - which is vital to world trade, and "this ship has now been directed towards the territorial waters" of Iran.
'Will Bear Consequences'
After the seizure of the ship, the Israeli army warned against escalating the conflict in the region.
"Iran will bear the consequences for choosing to escalate the situation any further," military spokesman Daniel Hagari said in a statement.
"Iran is the world's biggest state sponsor of terror. Its network of terror doesn't just threaten the people of Israel, Gaza, Lebanon, and Syria; the regime in Iran fuels the war in Ukraine and beyond... Israel is on high alert. We have increased our readiness to protect Israel from further Iranian aggression. We are also prepared to respond," the statement said.