The Central government will re-categorise industries into Red, Orange, and Green based on pollution potential in order to discourage more polluting industries.
"We have decided to re-categorise the green, orange and red category. Now these categories will be based on pollution potential because we want to discourage or have strengthened action for more polluting industries," Environment Minister Prakash Javadekar said.
Industries under Red category will be given consent to operate for five years, industries under Orange category can operate operate for ten years while those under green category will be given a one-time consent.
The government will also come up with stringent rules to deal with waste generated from construction of various infrastructure projects.
Earlier on Monday, Prime Minister Narendra Modi launched an air quality index to help citizens understand complex pollution data and its implications for their health while urging people to change their lifestyle in order to help protect the environment.
Modi claimed that India's contribution to pollution level in the world is one of the lowest and urged people to lead the world out of this crisis by adopting innovative methods, clean energy, recycling and reusing.
A World Health Organization (WHO) study of 1,600 cities released in May last year found New Delhi had the world's dirtiest air with an annual average of 153 micrograms of small particulates, known as PM2.5, per cubic metre.