The leak from the LG Polymers plant in the city of Visakhapatnam in Andhra Pradesh state came as people slept.
Doctors say patients have been complaining of a burning sensation in the eyes and difficulties breathing.
Areas around the plant have been evacuated. The leak may have been due to negligence, officials say.
Reports suggest initial attempts to control the gas leak were unsuccessful but the company and state officials say the situation is now under control.