Television footage showed a towering blaze and smoke billowing from the factory in the Harda district after the explosion, as fire engines rushed in and rescue officials tried to extricate people who were trapped inside.
At least 174 people were rescued and rushed to hospitals, divisional commissioner Pawan Kumar Sharma told the ANI news agency, adding there were 11 deaths.
"We will check the debris to see if there are any bodies there ... 40-50% of the debris has been removed," he said.
Police and district officials did not immediately respond to requests for comment, saying rescue efforts were ongoing.
The windows of houses nearby were shattered upon impact from the blast and residents described the experience as being similar to an earthquake, media reports said.
"When the blast happened, my bike started trembling, the ground was shaking ... I fell a few times and rocks flew from the ground and hit me," Mohammed Javed Ansari told ANI from a hospital bed.
An inquiry has been launched into the blast, Madhya Pradesh Chief Minister Mohan Yadav said in a social media post.
Prime Minister Narendra Modi's office announced compensation of 200,000 rupees ($2,408) and the state government announced compensation of 400,000 rupees ($4,817) each for the families of the deceased.
