The explosion took place while firecrackers were being manufactured at a unit in Krishna district headquarters at Machilipatnam in Andhra Pradesh.
One person was killed on the spot, while two girls of the same family were seriously injured.
The deceased was identified as Jogi Kiran (23), who is an MBA student.
The injured -- Jogi Lakshmi and Jogi Tulasi -- have been admitted to the district government hospital. The cracker making unit was being run in a house on the bypass road without permission, police said.
Andhra Pradesh Excise and Backward Caste Welfare Minister K Ravindra visited the scene and consoled the bereaved family members. Police have registered a case and an investigation is on.