Army has been pressed into service to help douse the fire which raged tonight several hours after it broke out.
No casualties in the blaze were reported so far.
Over 25 fire tenders were also involved in the fire fighting operations at the mill, 15 Km away from the International Rajasansi Airport near here.
The Mill is India's first exporter of newsprint to neighbouring Pakistan.
Amritsar Deputy Commissioner Rajat Aggarwal said the services of Army were requisitioned to control the blaze. The cause of the fire is yet to be ascertained.
"All the labourers and staff members working in the Mill came out from the affected area as soon as they saw the flames," the Director of the Mill Suneet Kochar said.
Agarwal said the intensity of the fire was increasing with each passing moment and the foremost priority is to control the blaze. Several thousand tonnes of waste paper were reported lying at the mill when the fire broke out.
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