The finance minister created a panic in the market by stating mentioning Bitcoin and Blockchain in his speech at the Union Budget 2018. The market consensus was that the government has banned Bitcoin, most news agencies helped stir the pot further with clickbait headlines.
The question - is Bitcoin banned in India?
No, it's not banned in India as of Feb 2018.
The answer is a little complicated - Bitcoin is NOT "illegal" in India, although it's not a "legal tender" which it's not in most parts of the world, except Japan which recognizes Bitcoin as "money" "legal tender".
Bitcoin is not illegal, you are free to buy and trade in cryptocurrencies at your own risk.
However, keep in mind, the government is working hard to regulate the market, so people with big money don't use the market for illegal activities like money laundering. KYC (Know Your Customer) is an important aspect of keeping track of the market and economic activities. Within this fiscal year, the government hopes to come out with a regulatory framework in line with what countries like USA plan on doing.
I have written a slightly longer blog post here, explaining why Bitcoin is not illegal in India.
http://coinbake.in/2018/02/04/is-bitcoin-legal-in-india-union-budget-2018/