Just by looking how they will soon launch a digital version of their fiat shows a clear motive on why they are pursuing a bill like this one. With their plan of removing all kinds of crypto assets in their country they are eliminating the potential competition surround their own cryptocurrency. These kinds of law doesn't only violate the rights of their people but also shows some kind of dictatorial ruling in their state. If I were a citizen in India I would ask for the Indian crypto industry to unite from investors and miners to crypto exchanges and form a protest against this unfair bill, a voice that can be heard is something that will get their attention especially when the election time comes.
It has been happening for a while in countries like that where democracy is... well, shaky at best. They will simply ban Bitcoin, easy solution just like china and others, in Europe and more democratic countries, they cannot do that so they try other methods like taxes, fear, etc. Governments will always try to control crypto, I understand why, I would probably want to control it too, do you really trust most people?