The explosion occurred in the afternoon at the privately owned factory in the Achankulam area of Sivakasi town in Virudhunagar district, some 500 kms from state capital Chennai.
"Friction during mixing of chemicals apparently caused the explosion in the factory. The blast sparked a blaze which soon engulfed the factory. At least 50-60 people were working there at the time of the accident," a police official told the media.
While 11 charred bodies were retrieved from the factory, three more people succumbed to their injuries at a hospital, the official said. "Some 36 other workers are currently undergoing treatment at Kovilpatti Government Hospital and Sivakasi Government Hospital."
At least 10 fire tenders have been pressed into service to douse the flames. "Firefighters are still looking for survivors," a local fire official said.
Indian Prime Minister Narendra Modi has condoled the loss of lives. "Fire at a firecracker factory in Virudhunagar, Tamil Nadu, is saddening. In this hour of grief, my thoughts are with the bereaved families. I hope those injured recover soon," the PM's office tweeted.
In another tweet, the PM's office said, "An ex-gratia of Rs 2 lakh each has been approved from PMNRF (PM's National Relief Fund) for the next of kin of those who have lost their lives due to a fire in Virudhunagar."
Tamil Nadu Chief Minister K Palaniswami has also announced a compensation of Rs 3 lakh for the families of each of those killed and Rs 1 lakh each for those critically injured.
"I have instructed the district authorities and medical experts to give the best treatment to the injured and have asked the local administration to ensure families of the deceased and injured are informed and necessary arrangements made," Palaniswami said.
Sivakasi is unofficially known as the firecracker capital of India.
Over half a million residents of Sivakasi and its nearby towns depend on local firecracker factories for their livelihood. But every year, at least 15 to 20 people die in explosions at fire factories there as hardly a few are authorised and adhere to fire safety norms.
India is the second biggest producer of fireworks after China. The annual turnover of the Indian firecracker industry is USD 365 million. And Sivakasi alone contributes 90% to the country's overall cracker production.