About 164 truckloads, sent from the neighbouring state of Rajasthan, have failed to arrive since May.
Police say they suspect the involvement of illegal mining outfits, but one officer said some explosives might have been sold on to militants.
Two men have been arrested and rewards have been offered for five others.
The explosives were sent out from a factory in Dholpur in Rajasthan.
Police say the total amount of missing explosives is 848 tonnes, besides hundreds of thousands of detonators.
Indians smuggling ring is suspected of hijacking more than 160 trucks carrying 450 tons of explosives, police in India say. Police first believed about 60 trucks were missing, but after interrogating a suspect in the case found the number to be much higher, The Times of India said Friday.
Investigators suspected the existence of a nationwide explosives smuggling racket, said Sagar district Police Chief Vijay Kumar Suryawanshi.
Authorities discovered details of the scheme after questioning four employees from Dholpur’s Rajasthan Explosives and Chemicals Ltd., an explosives supplier.
The scam may have been made possible because employees working for the company that purchased the explosives, Sangam Explosives Ltd., knew when they were to be shipped, allowing them to be hijacked en route, the report said. Investigators did not say what the stolen explosives were to have been used for.
Police said they have recovered hundreds of containers of explosives, detonators and associated items.