The jawans were trying to destroy the ammunition which did not explode when fired from a few rocket launchers, the official said.
He said the incident happened during a "demolition" firing in Pokharan by the jawans of 14 engineering regiment.
The exercise to destroy faulty ammunition is referred to as "demolition firing".
All the injured have been evacuated by air to a military hospital in Jodhpur.
An inquiry has been ordered to ascertain the cause of accident, the official said.