Also if I were to sell BTC why would I really want the rupees? So I can see BTC commanding a premium in India - bifurcated exchange rates due to capital controls?
Um, you just said it yourself. So you can rent your beach house for 30k ruppee's without having to deal with ATMs. Just trade your bitcoins..assuming the beach house renter doesn't know what BTC is. Or if they need some of the 30k to pay back the mortgage on the beach house because you paid them in BTC.
Lots of reasons people might want to convert it back.