I speculate that the Indian government might not be afraid that bitcoin may destabilize the rupee. It is the banks, which are the institutions that control the government, who might be afraid of bitcoin in competition versus their other secret operations. Money laundering.
Yeah, there have been too many scandals with money laundering performed by banks, that I honestly don't think they have the right to say anything in this regard when it comes to cryptocurrencies. As for India in particular, I think it should be worried more about underground economics that will definitely destabilize the rupee if they don't offer reasonable crypto regulations. I think they still have time to do that, though, as it's not lilke India is among the most known countries where people use cryptocurrencies, and even the total number of crypto users is barely able to disrupt any serious national economy for now.