Among the dead were a woman and a child who tried to escape by jumping from a window, the Indian Express said.
Frequent raids by civic authorities to enforce building codes, fire safety measures and evacuation procedures in New Delhi have failed to curb violations in this rapidly expanding city of more than 18 million people.
Delhi Hotel Association Vice President Balan Mani told news agency ANI that all safety norms were followed in the hotel adding that the accident occurred due to fire in ducting because of which it had spread to the hotel rooms. Those injured have been sent to hospital. Two staffers of hotel Arpit Palace also died.
The fire was doused around 7 am, however, the rescue operation went on for four hours and the firefighters and Delhi police officials were able to rescue 35 people. A license is issued only after inspection.
At least 17 people were killed when a major fire engulfed a five-storey hotel in the heart of the national capital before dawn on Tuesday, leaving some survivors in critical condition and others dazed and shaken.
Confirming 17 deaths in the incident, Delhi's top fire officer Atul Garg said that the fire department received a phone call informing him about the fire at 4:50am local time.
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Three Myanmar citizens staying at the hotel were missing, the NDTV news network reported. The fire department will also conduct an inquiry into the incident.
"Obviously, even if people came to the emergency exit, they could not have escaped as it was too narrow and it was locked anyway", he said.
There were 53 people in the 45-room budget hotel, which had a canopy on the terrace, housing what appeared to be a restaurant.
Deeply saddened by the loss of lives due to a fire at Karol Bagh in Delhi.
Fires are common across India because of poor safety standards and lax enforcement of regulations.
The cause of the fire was not known immediately but officials hinted at a short circuit.