Quote
The government does not consider cryptocurrencies legal tender or coin, and will take all measures to curb the use of these crypto-assets in financing illegitimate activities or any part of payment systems.
So it could be interpreted simply as saying they don't want it used for anything illegal, but that it's not banned. However, the last 6 words in that sentence, "or any part of payment systems" seem to shift the emphasis to imply they don't want people using it to pay for things as a currency and will take measures to prevent that. Effectively, this would restrict Bitcoin's usage in India to that of a speculative investment asset. It all depends on your interpretation of what was said. It's not unreasonable to take either meaning as correct due the the vague wording.
It's certainly fair to say that financial officials in India are decidedly hostile towards crypto, but there are categorically no clear signs of an outright ban.
Sources:
https://www.newsbtc.com/2018/02/01/curbing-illegal-activities-is-not-a-crypto-clampdown-in-india/
http://bitcoinist.com/india-wont-ban-bitcoin-embrace-blockchain/
