I don't think there will be cost savings, and these machines will need to be replaced regularly as well so it won't be a one-off cost. And the present system isn't really expensive as elections aren't held every year, so that $600m price tag for the Indian election has to be weighed against the GDP of an entire electoral cycle of five years. We are talking about a price tag of around $120m a year for India then, against a GDP per annum of almost two trillion (if not higher, I am just going by 1.87 trillion for 2013). Per capita that's something like just under 10 cents a year from each Indian. I somehow doubt an IT project, which also has to accommodate all of India's many languages and scripts, is going to make a significant saving on that.
I am not aware of any research linking voting machines to turnout, have you got a source for that? I imagine some older people might even get frustrated and stay away. Australia has something like ~95% turnout through implementing a small fine for not voting (the tasty BBQs at many polling stations may also have an effect). There are also limited polling booths open before the election for those that expect to not be able to vote on the day.
So the benefits just aren't there, and as you say yourself "I don't know how we would implement such a system".
I was thinking something along the lines of voting online. There is significant research to support the idea that more people vote when it requires less time and effort to do so. Not just research, there are many political parties in America and elsewhere that try to improve their chances at the polls by making it more difficult to vote and keeping turnout low.
Voting online would improve the situation greatly, but it isn't easy to implement. To wit, the problems are
1. How to authenticate a user 2. How to map each voter to a vote, without keeping a record of whom he voted for 3. How to prevent fraudulent votes
I've thought about it but I couldn't come up with a good solutions to these.
If implemented correctly (ie without fraud), there are huge potential benefits
* Cost savings. India's general election cost the taxpayer $600m and state elections will cost a similar amount. If there are early elections, the cost is repeated.
* Turnout. Right now certain sections of society in any country are more likely to turn out, to the detriment of democracy. A large part of election campaigning is getting people to turn up to the booths. This is so hard that rarely are the turnout percentages higher than 60%, which is a pitiful number. If we could make it simpler and quicker to vote, this would be less of an issue.
To be honest I don't know how we would implement such a system. Certainly today's machines that rely on secrecy for security are a joke and should be replaced.