"Whoever has looked at pollution in Delhi yesterday would find very good arguments to replace diesel buses with electric buses," said the German chancellor, whose visit coincided with one of the worst spells of pollution in Delhi and nearby areas.
Merkel pledged to spend one billion Euros (approximately 1.1 billion U.S. dollars) in the next five years on green urban mobility in India, as part of German-Indian partnership projects.
Delhi's air pollution has hit one of the highest levels in nearly two years, as the average Air Quality Index (AQI) touched 484 around 16:00 hours on Friday, which was dubbed as "severe plus" category.
Following a rise in air pollution levels, the schools belonging to the Municipal Corporation of Delhi (MCD) in south Delhi have been shut till Nov. 5. All construction activities were banned in the national capital and surrounding areas, and bursting of firecrackers were also prohibited till the end of winter season.
A "health emergency" was also sounded in the national capital on Friday.
The air quality improved minimally on Saturday morning and came out of the "emergency" zone, but pollution levels are still in the "severe" category and the city continues to be shrouded in smoke and haze.
Merkel also visited a Metro Station in Delhi along with Prime Minister Narendra Modi. The solar panels at the Metro Station have been funded by the German government.
Germany is one of India's largest trading partners in Europe, with more than 1,700 German companies operating in the country.