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Actually they can but I'm afraid they like Bitcoin. In fact they have been very repressive about it in recent times. This government and reserve Bank both want Bitcoin to be completely banned to save India rupee. So you can understand.
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Maybe. However there's actually much more required than Bitcoin mining for India. The massive need for drinking water in two of the nearest states is the biggest requirement as it seems now. But I'm hopeful that this will provide for more than enough on energy front as most of India is going to be running on solar energy in 10 years, so Bitcoin mining can't be ruled out.