Six persons suffered severe burn injuries in the blaze and were brought to the government-run MY Hospital. One of them, after examination, was pronounced dead, the hospital's Emergency Medical Centre In-charge Dr Sumit Shukla said.
The condition of the five others is critical, he said.
The deceased was yet to be identified, the police said, adding the victims were working in the cracker shop and its adjoining establishments.
"The fire started from a cracker shop and quickly engulfed other shops located nearby," Indore Deputy Inspector General of Police H C Mishra said.
Mishra said the police have started an investigation into the cause of the blaze and are also ascertaining whether the cracker shop had a licence.
According to eyewitnesses, 20 two-wheelers were gutted in the blaze.
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