The two-storey complex, where the affected shop was located, houses other similar shops that manufacture seasonal products including firecrackers.
"Around 7.30 pm, our workers saw some sparks in a set of wires connected to the shop," said Rakesh Chawla, who owns a cosmetics shop on the ground floor.
"A couple of minor blasts were heard - probably when the fire reached the chemicals stored inside the shop," said Satpal Singh Manga, president of the Gandhi Market Traders' Association.
He also said that despite repeated requests, the BSES had not removed the wire meshes overhead which cause fire several times a year.
Another fire Another shop in Bhagirath Palace market caught fire around the same time.
At 7.55 pm, the fire service received a call saying a shop has caught fire. Fire-tenders were rushed to the spot and the fire was controlled by 9pm.