The market is considered the largest cloth market in Asia and it houses a number of textile units and factories.
According to Delhi Fire Department, they got a call about the fire at 3:15 PM following which 20 fire tenders were rushed to the spot.
"It is a medium category fire and efforts are on to douse. It started from a shop in Bhagwan Das building," said a fire official.
Police have evacuated the nearby buildings and area has been cordoned off to keep the crowd away.