At least 16 other workers suffered serious burns in the blast and a massive fire that broke out late Wednesday in the plant in the coastal city of Visakhapatnam, said Police Commissioner Purnachandra Rao.
The explosion occurred when workers were checking a newly installed oxygen unit in the steel melting unit of the Vizag Steel plant.
Nearly 30 workers and top officials of the plant were inspecting the equipment when the blast occurred.
Witnesses said the explosion was so powerful that cars parked outside the unit were flung in the air.
The death toll was expected to rise because the condition of some of the injured was critical, Rao said.
The 41-year-old Vizag Steel plant is one of India's major steel producers.
The plant has been expanding over the past four years, with the addition of new units that were expected to nearly double its current capacity of 3.5 million tons.