The new index was launched as part of Prime Minister Narendra Modi's 'Clean India Mission' in October 2014 to create awareness among people about air pollution and its likely health impact.
"The index will be operationalised in 10 cities from March. The consultations are over. Very soon we should be in a position to finalise the index," an official source said.
The government plans to roll out the index in 46 cities with a population of over one million and 20 state capitals over the next five years.
The AQI will provide one consolidated number after tracking eight pollutants and will use colour coding to describe associated health impacts.
It will quickly disseminate air quality information almost on a real-time basis. It also entails the system to account for pollutants which have short-term impacts.
Of the 20 most polluted cities in the world, 13 are in India, according to the urban air quality database released by the World Health Organization (WHO) in 2014.