The government is just scared it will lose its grip on the control of money,inflation is high and fears more people will convert their cash to bitcoins,draining bank accounts of monies.It all stems from ignorance anyway.
Exactly that is the matter why cryptos have been banned from the Indian market, India being a developing country cannot take any chances which might cause an economic instability in the region and also due to internal and external conflicts among the neighboring countries and the people of India, economic state of India decides a lot and thus if by any chances cryptos causes instability in economic condition it can be a great threat to the country itself.