TL;DR the passport rules have still not been updated and officially speaking, you need a gender conformation surgery certificate. As this requirement is essentially unconstitutional, there are ongoing cases against the Union of India, but there is no ruling yet, and no revisions to the rule appear to be in sight.
However, senior passport officials can overturn this requirement at their whim and I have spoken with trans people who got a binary marker based solely on their Transgender certificate (mentioning it as "a document issued by the district magistrate" seems to help, instead of mentioning it simply as the TG certificate).
In the worst case, it seems the passport staff in most cases are willing to give you a T or X marker without surgery. So that's the "consolation prize" you can settle for, in the absence of a binary marker.
Hope that helps.
