This is a disappointing development in India, but not unexpected. Of course, nations will take Bitcoin's technology......then attack Bitcoin. This underscores a basic truth about governments. It's all about control. Not business ethics, not what's best for their people, and certainly not about freedom and prosperity for all. Lying about Bitcoin and mentioning "illicit use" without any proof says more about the Indian government than about Bitcoin.
All this will do is push the best and brightest coders, developers and entrepreneurs to other nations and place to rebuild and grow. India can't stop Bitcoin, they can only hope to contain it or slow it down.
They want you to use their Aadhaar, which requires full submission of you retina scans, facial recognition, fingerprints, etc. to use. In India, you will be tracked and processed, like a digital slave, to use their economy, from now on. Bitcoin doesn't require any of that, has superior privacy and open-source apps/tech, plus it increases in value every year, current dip not withstanding. It is up to the people if they are gonna bend over and take it. The coders, developers, business builders and 'hodlers' will not.
India wants to force Indians to use their inferior, knock-off, state-run version of Bitcoin. They will use Bitcoin's technology to re-build their national economy. That is a bigger compliment to Bitcoin than any Bitcoin investment could ever be.
Biting the hand that feeds IT
