The prime minister has intervened for the first time in the row over Dow Chemical's sponsorship of the wrap that will surround the main Olympic stadium in London, backing the deal in the face of protest from the Indian government and human-rights campaigners.

David Cameron has followed the line adopted by the International Olympic Committee and London 2012 chairman, Lord Coe, arguing that Dow was not the owner of Union Carbide at the time of Bhopal disaster in 1984 that killed an estimated 15,000 people.

Campaign groups including Amnesty International and politicians including the shadow Olympics minister, Tessa Jowell, have called for the relationship to be dropped, claiming that Dow has ongoing liabilities relating to the fatal gas leak.

Cameron said that while he "understands the anger there is about the huge suffering that happened at Bhopal and afterwards" and was "profoundly shocked" when it happened, he does not believe Dow can be held responsible.

"We have to recognise two important points. The first is that Dow was not the owner of Union Carbide at the time, so this is a different company and a different business," Cameron told the Indian broadcaster CNN-IBN.

"Secondly, and more importantly, the sponsorship of Dow for the Olympics is arranged by the IOC. It is their decision-making process and I don't criticise their decision-making process."

The IOC signed its own $100m (£64m), 10-year sponsorship deal with Dow around 12 months before London 2012 organisers awarded it the sponsorship of the fabric wrap that will surround the main stadium, in the wake of the withdrawal of government funding.

"What I'm saying, as the British prime minister who wants to see the Olympics be successful and see the Olympics not used for industrial or political or other purposes – I can't see a problem with the IOC being sponsored by Dow," said Cameron. "I think they followed perfectly reasonable processes, therefore I can't complain about Dow sponsoring the London Olympics."

The Indian Olympic Association and the Indian sports ministry have appealed to the IOC to drop Dow as a sponsor, amid speculation that officials could boycott the opening and closing ceremony. In a reply last week the IOC restated that it does not believe Dow has any liabilities relating to the disaster.

Pere Miro, the IOC's director of national Olympic committee relations, wrote to the Indian sports ministry last week saying that the IOC sympathises with the grief of the victims' families but that Dow had bought Union Carbide 16 years after the accident and 12 years after a full and final compensation settlement was agreed.

Campaigners, however, believe that there are a host of other issues surrounding Dow's suitability as an Olympic sponsor and claim its involvement is undermining London 2012's claim to be the most sustainable Games ever.

(By Owen Gibson, Guardian.co.uk, 12/03/2012)