Sterlite Copper, the company at the centre of the controversy, now operates a 400,000-tonne per annum unit in the city. Police units have been rushed from Madurai and Virudhunagar to bring the situation under control.
Tuticorin witnessed several protests by locals and others against the Sterlite Copper plant and its proposed expansion.
He also urged people to stay calm and said that the government respects the feelings of the people and will take appropriate action on the matter.
Hurling stones and setting government vehicles and public property on fire, the agitators went on the rampage in the town, about 600 kilometres from Tamil Nadu's capital Chennai.
The chief minister also announced a compensation of Rs 10 lakh to the families of each of those killed, Rs 3 lakh to those seriously injured, and Rs 1 lakh for people who suffered minor injuries.
The agitation against Sterlite Copper, which represents the copper unit of Vedanta Limited, escalated in February this year after the company announced the expansion of its unit in the coastal city of Thoothukudi (Tuticorin) in Tamil Nadu.
The protestors also tried to gherao the collector's office and torched vehicles inside the premise.
MK Stalin of the opposition DMK blamed the state government for the violence, saying that people had been protesting peacefully for so long but the administration did not attempt to address the concerns of the people. The Tamil Nadu Vanigar Sangam (Traders Association) has called for an indefinite shutdown across Thoothukudi. "This government's lackadaisical ways have led to the deaths of innocents", said Rajinikanth.
Rahul Gandhi said people were murdered in Tuticorin for protesting against injustice.
The party in its statement said, "The peaceful protest by the people of Tuticorin against Sterlite, demanded justice was ignored by the Governments".
"I was grieved to know nine persons were unfortunately killed in this incident", he said, expressing his sympathies and condolences for the families of those killed.
In the meantime, the Tamil Nadu government reportedly imposed a blackout on television news channels in the Thoothukudi region that were reporting on the Sterlite protests.
While wishing all the injured a speedy recovery, Mr Palaniswami said government jobs would be given to one member of the deceased families based on their qualifications on compassionate grounds.