I don't think that this is the case. I think that is is more in relation to what libert19 said, that the population that is using the blockchain are choosing international exchanges to avoid the costs that come with local exchanges.
The population is doing that as a side effect of the government's oppressive actions on local exchanges, its not the other way round.
I personally think that governments and lawmakers around the world have come a long way in undersanding the blockchain - yes, there is a long way to go, but I know that they are now wise enough to at least create laws and regulations around what is in their best interests...which might not be good for the people overall, but what laws and regulations are? It's always going to be in the favor of the government...but at least guidelines are becoming clearer.
In the Western countries, perhaps, not in India. Here the government is run by 8th standard fail politicians and they dont even know how to spell the word cryptocurrency yet and have been making policies around the same. Although crypto-literacy is happening but at a very slow rate here and we are hopeful for the future but not anything immediately.
Even the West is drawing out its plan to regulate crypto but failing to make any concrete step, India is way behind on that.