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.
I spoke about this bill to my friends in India and they said its only a draft and the actual bill may not be so harsh, also they informed me that therere many cases yet going on in Indian courts regarding the approval of bitcoins. Indian government aim of launching its own crypto shall be a waste of their resources, as no one will buy their centralised crypto. In my opinion Indian government should look at Japans model regarding bitcoin, and implement the same in their country.
They know this and they are fully aware that people would not buy into their own coin idea that much, which is why they are planning to first ban cryptocurrency and push their own digital coin to their citizens, but I doubt they will succeed, because I dont see any benefit their coin will be of other than being a utility coin that will be used internally which will only benefit the government alone.
Bitcoin does more than being a utility coin, it also serve as investment which is why many people would always use Bitcoin and any other coin that serves this purpose, people will only accept India digital coin, if they make it a decentralized one.