Just recently, RBI deputy governor KC Chakrabarty offered a statement regarding Bitcoin regulation in India.
"Regulation comes only when people are doing certain business and we come to understand that something wrong is happening. First of all we don't understand this subject...But, at present, what we are saying is neither we regulate them nor we support them...Whether it is... legal or illegal, we don't know. If it crosses the limit of legality then people may face a problem. So people should be cautious, should understand."
There are simply so many things wrong with this statement. First of all, RBI "don't understand this subject". This alone is a huge red flag as a government entity with little to no understanding of how Bitcoin works has the power to regulate its use in India. The next bit might seem like good news, that India has no plans to regulate Bitcoin. However, it is uncertain whether or not Bitcoin is legal in the country. Chakrabarty is creating uncertainty here and stating that at any time, India could declare Bitcoin illegal, which would cause issues for anyone holding/using Bitcoin.
Bitcoin exchanges cannot get regulatory approval in India, and this situation is unlikely to change soon given these RBI statements. With so much uncertainty, Bitcoin doesn't seem to have much of a future in India.