At least 21 people have been killed and a further 16 injured in a large explosion at a fireworks factory in northern India.

The explosion on Wednesday caused the building to catch fire and collapse in Batala, a town in Punjab state, 460 kilometers outside of New Delhi.

Rescuers were fighting the blaze and searching for further survivors. The explosion took place in a busy neighborhood and local authorities warned that the death toll could rise further.

It is not known how many people were inside the factory when the blast occurred.

"Twenty-one people have died so far, rescue workers are still searching for survivors in the debris," police inspector Mukhtar Singh said. "Another 15 or 16 people, mostly laborers working at the unit, have been rushed to nearby hospitals with injuries."

The building caught fire after the explosion. Nearby cars and buildings were also damaged.  

Deepak Bhatia, a state official, said the cause of the explosion was being investigated.

Punjab Chief Minister Amarinder Singh tweeted that he was "deeply anguished to learn of the loss of lives".

Read more: India working to make cars run on cooking oil

Fireworks big business in India

Fireworks manufacturing is in high demand in India, with festivals and weddings nationwide driving the demand particularly during the Hindu festival of Diwali, which falls between October and November.

Some of India's fireworks factories operate without proper licenses and produce goods that don't comply with safety regulations.

Batala officials, however, said it was too early to determine what caused the explosion.

Read more: German environmentalists urge ban on fireworks in major cities

mvb/msh (AFP, AP, dpa)

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