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At least 21 others were injured when the fire broke out Tuesday evening in a suburb of Madurai, 500 kilometres (310 miles) from the state capital Chennai.
Police said the impact of the resulting explosions caused the building to collapse.
"The incident occurred while packing the crackers," said Madurai police superintendent M. Manoharan.
It took four hours for fire officials to control the blaze, and their efforts were hampered by a water shortage.
The cause of the fire has yet to be determined.
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