Those restrictions were imposed almost a decade ago. The government was looking to shore up the collection of tax revenue and some of the officials were concerned that PayPal is being used to transfer payments to Indian freelancers from foreign nations and most of this money doesn't show up in tax returns. Therefore they removed most of the PayPal functionalities in India. For example, in India you can't store any money in your PayPal account. You can only make or receive payments through PayPal, using your bank account or credit card. But nowadays most of the freelancers here are getting their payment in Bitcoin or Ethereum instead of PayPal.