A police spokesman said the fire broke out late Thursday at the Aviation Research Centre of the Indian air force in a remote town of Orissa's Cuttack district, some 30 kilometres (18 miles) from state capital Bhubaneshwar.
Air force sources in New Delhi said the blaze destroyed the section, which stored small arms munitions.
"The section containing heavy weaponry has been spared," a source said in New Delhi after fire-fighters put out the blaze early Friday.
Thousands of people living in villages around the research centre were evacuated as a precaution after ammunition began exploding inside the depot.