At the airports there are signs saying gold imports are limited. If you check Google News you can see people getting arrested for bringing it in and not declaring it. I've read that the rate is about $80-$120 more per ounce in India.
Gold is more expensive in India because there is a flat 10% import duty (and additional VAT, which is changes from state to state). So the lowest price for which you can get gold in India will be 10% more than the international price. The government seems to be cash-strapped, after undertaking a lot of populist measures (elections are only a few months away).
There is a chance of change in the government after the 2014 elections. Everyone is pretty occupied with the upcoming elections and no one is bothering about the BTCs. I think the regulation scene will become clearer only after the elections.