Officials said it was very hard to access the poorly lit premises in the commercial hub of Sadar Bazar.
More than 30 fire tenders were sent to the spot.
Locals had called the police and emergency services as the blaze lit up the early morning sky, but firefighters struggled to reach the victims amid the narrow lanes.
"I have been to the factory and this tragedy was waiting to happen", he told AFP.
At LHMC Hospital, fellow villagers and acquaintances were frantically looking for 14-year-old Mohammed Sahmat and 13-year-old Mohamed Mahbub, who were present in the factory during the fire. The area's aging buildings are stacked with apartments, shops, storage facilities and manufacturing units.
Avtar Singh, an assistant division officer for the fire department, said that more than 60 people had been evacuated from the building and the injured were transported to three local hospitals. Most of the deaths were caused by people inhaling poisonous gases in the cramped factory, The Associated Press reports.
Dr. Kishore Singh said the victims were brought to the hospital by rescuers.
Of the 15 injured brought to LNJP, nine people are under observation and others have partial injuries, he said.
Arvind Kejriwal, the chief minister of Delhi, described the incident as "very very tragic news". Almost 150 fire personnel carried out the rescue operation and pulled out 67 people from the building. Firemen doing their best.
"I extend my deepest condolences to the families of those killed and wish for the speedy recovery (of the injured)", he said. The factory manager was also detained in relation to the fire, but it was uncertain as to whether he had been charged.
Authorities said they did not yet know the cause of the blaze but Delhi's fire services director told the Press Trust of India the site had been operating without the required fire safety clearances.
Filmistan is mainly a residential area in Delhi, and known for housing small illegal units manufacturing various kinds of products using plastic and paper as raw materials.
Bihar native Wajid Ali sank down to the floor in front of the mortuary at a city hospital after seeing the body of his young cousin and learning that his two brothers are untraceable after the massive blaze in north Delhi's Anaj Mandi area on Sunday that has killed at least 43.
"My thoughts are with those who lost their loved ones".
Prime Minister Narendra Modi announced Rs 2 lakh as compensation for the families of the dead and Rs 50,000 for the injured.
A massive fire had broken out at a factory in Delhi's Anaj Mandi on Dec 08. "Have asked BJP Delhi karyakartas to provide all possible assistance to those affected".
"Their only fault was they were poor", Ali said.
The most deadly fire in New Delhi was at the Uphaar Cinema that killed 59 in 1997.