^
That's what I think too.

What if an Indian individual exchanges crypto for crypto using a business not registered in India?
What happens if the same Indian citizen exchanges crypto in the Internet for currencies not legally accepted in India?

The Indian government cannot ask an exchange in Japan to send them their AML report for someone who was trading in Japanese Yen, therefore I believe this is only for local businesses, located in India and trading in Rupees.
If citizens of India trade crypto and exchanges back and forth between stable coins, I believe they're out of the country's jurisdiction and outside of their AML laws.