The 26-year-old German lapped the Buddh International Circuit with a best time of one minute 25.332 seconds, a whopping half a second quicker than team mate Mark Webber in second place.
The lap, only fractionally slower than last year's pole position time of 1:25.283, meant Vettel had topped all three practice sessions - as he did last year before going on to win from pole.
Red Bull, who can wrap up their fourth consecutive constructors' title on Sunday, have also been one-two in all three.
The session was delayed by 20 minutes due to smoggy haze shrouding the circuit, built on farmland to the south-east of New Delhi, that prevented the medical helicopter from operating in the case of emergency.
A truncated 40 minute session finally started with a flurry of activity.
The problems echoed those experienced by MotoGP in Japan, where practice for the penultimate round of that championship had to be cancelled on Friday due to rain and fog grounding medical helicopters.
Ferrari's Fernando Alonso, the only man who can deny Vettel the title on Sunday providing he finishes in the top two positions, was third fastest with a lap of 1:26.105.
Alonso is 90 points behind Vettel with a maximum 100 still to be won.
Sauber's German Nico Hulkenberg was fourth fastest ahead of Frenchman Romain Grosjean in the Lotus.
Sauber's Mexican Esteban Gutierrez hit a kerb hard and his car was launched momentarily into the air before hitting the asphalt hard.
Hulkenberg also clipped one of his mechanics, who was knocked over but appeared unhurt, in the pit lane.