Around 700 shops were reduced to ashes in a massive fire that broke out at Naharlagun Daily Market near Itanagar on Tuesday morning, police said.

There was no casualty in the fire that was first spotted around 4 am, they said.

The market, the oldest in the state, is situated near the fire station and Naharlagun police station, around 14 km from Arunachal Pradesh's capital Itanagar.

The fire is suspected to be caused by firecrackers or lamps lit for Diwali celebrations, police said.

Firefighters swung into action immediately but as the shops were made of bamboo and timber with dry items stored in abundance in the market, the blaze spread fast, they claimed.

Panicked shopkeepers struggled to save anything they could as exploding LPG cylinders further added fuel to the fire.

Three fire tenders, one of which was brought in from Itanagar, fought for hours to bring the blaze under control, police said.

The exact damage caused by the fire is being assessed, but it is estimated to be in crores of rupees, they said.

Superintendent of Police (Capital) Jimmy Chiram said the exact cause of the fire would be known after the completion of the investigation by the fire department.

Shopkeepers alleged that after spotting the blaze they rushed to the adjacent fire station but no personnel could be found. Further, when the fire services personnel arrived, the fire engines did not have water.

To refill the engines, the personnel had to travel a long distance, and they could come back with water only around 5 am, by which most of the market was already gutted, the shopkeepers alleged.

"The police also did not act. All of them should be terminated from service for failure to perform their duties," Naharlagun Bazar Welfare Committee president Kipa Nai said.

After speaking to the shopkeepers, Arunachal Chamber of Commerce and Industries (ACC&I) president Tarh Nachung demanded that all fire personnel on duty be suspended for negligence.

It was the failure of the government that it did not set up the minimum infrastructure required for fire fighting -- such as water filling points, which should immediately be made available at different locations in the Capital Complex, he said.

"If this is the situation in the heart of the capital, what would be the situation in the districts," he questioned.

Itanagar MLA Techi Kaso told reporters that the market would be rebuilt by the state government in cooperation with ACC&I.