Television footage showed smoke and flames billowing out of a semi-circular air-conditioned tent where home appliances and electronic goods were being sold.
Police say that many more could be trapped inside.
"Forty bodies have been taken out, and there are at least another 40 to 50 people inside," a police official at the Meerut police control room said.
"The tent was very long, extending for more than 100 metres and there was only one corridor to exit, so people could only come out one by one."
About 60 people were taken to one hospital, some with very serious burns, a witness at the hospital said.
Ambulances and fire engines moved in through the narrow streets leading to the fair.
Doctors in hospitals and nursing homes said they had started seeing badly burnt cases arriving.
"I have received eight cases - two serious - in the last one hour," said Sandeep Jain, a consultant at a private nursing home in Meerut, about 80km northeast of New Delhi.