The government in Delhi closed schools until November 5 and distributed five million masks as air pollution levels in the city were classified as "severe".
"Due to the rising smoke of straw in Delhi, the pollution level has increased a lot. Therefore, the government has decided that all the schools in Delhi will remain closed till 5 November," the city's chief minister Arvind Kejriwal said in a tweet.
Kejriwal said the city had turned into a "gas chamber" and said it was important that people protect themselves "from this toxic air".
He said that farm fires from neighbouring states were sending smoke into the Indian capital.
A government panel declared air pollution a "public health emergency" in the region and banned construction activity, the India Times reported.
The Air Quality Index, measuring levels of tiny particulate matter that enters deep into the lungs, reached over 500 in the capital, which was the maximum recorded by India's Central Pollution Control Board. Levels above 400 indicate severe conditions that even put people with healthy lungs at risk.
The US embassy in New Delhi, the Indian capital and a district of Delhi, said that the index had reached 471 at 9 am local time.
Several players on Bangladesh's cricket team wore masks on Friday.
"There's a bit of pollution in Bangladesh as well so it's not a like a massive shock to the system as maybe some other countries would maybe experience so the players have dealt with it really well," coach Russell Domingo said.
German Chancellor Angela Merkel met with Indian Prime Minister Narendra Modi in New Delhi on Friday. Neither she nor the prime minister wore a mask in photos and video released from the visit.