Boils back to the same point - can you buy necessities of life in India today with Bitcoin in the short to medium term? No. So if you're accumulating black money (say you are a property developer) it will be difficult for people who buy houses to pay you.

Also remember that Bitcoin isn't really anonymous and it's fully traceable. So the police merely has to do some rubber hose type de-anonymization of which Bitcoin address was the payment made to you in and from there on, all your transactions can be back-traced.

I remember reading about the Indian government passing regulations for the tight control of Bitcoin<->₹ transactions in the country.

But there can still be Bitcoin <=> Bitcoin transactions as an alternative to Paytm et al. It's very unlikely to pick up though I guess.

Most people are only interested in Bitcoin insofar as it's convertible to a local currency. So if it's difficult to do that, it's difficult to use Bitcoin for most transactions.