The legality states that only Banking companies can accept cash deposits.
This is why a system like Mt Gox is not yet possible in India unless you can obtain a Banking/MSB licence.

With Brick and Mortar establishments being the weakest link in the Bitcoin economy, Anything centralized will be stopped by the authorities.

Getting rid of them will become easier in a few years for sure. Bitcoin is not a short-term plan for India.

In the mean-time, if someone can work around cash based pre-paid cards(Regulated as well) as a way to purchase them and get money from point A-B, That may be the low hanging fruit for India.

http://bensonsamuel.com/bitcoin-3/reserve-bank-of-india-regulations-on-bitcoin-in-india/

Also check out localbitcoins.com

Mt Gox is not an intermediary, they make a cut and accept deposits, which get them into quasi-banking.

A good idea. Hope we see an exchange soon. Are all the bitcoiners from Bangalore here? (I know at least 3 are  )

I have been fortunte enought to have hosted escrow for a few transactions.

There is tremendous scope in Escrow.

I like this idea , i know we have no exchange in India yet , i am from delhi and looking for options to get a basic  exchange setup  here.  may be we  all can network together and  see if we can do  some thing about it,  i have been looking at the indian law  , the law  seems to  be regulating currency and payment systems  issued by a country or a specific company, payment system  regarding  credit cards and  payment system  like  the ones  created by pay pals.  but with bit coin it is decentralized not  issued by any  particular  person or government, i believe that the Indian government would not have any jurisdictional authority,  if we look  at the sale and purchase of  bitcoine as a product rather than a mode of currency , what the  person  does  after the purchase  will be his responsibility,
Another  added  bonus is that all  bit coin transaction is in the public domaine and  if the government cries that they cant know that  transaction happens then  our  response  would be to have them  pull up the transaction records  and connect the dots them self. 


Guys tel me what you think of this , and  do pm and lets see what we can  build.

Do you know who are doing this . and what market penetration they are focusing on.

ermm.. sooo Who is working on it?
Or is this information confidential? in which case nevermind.

I will check with him if he can come on to the forum and post about it.

He had requested that no further information about this project be shared from my side.

It will be ready during the first half of next year.

It is currently at a POC state.

Just a quick question. Does anyone have an estimate of the bitcoins that are traded by Indians or in India? A ball park figure would suffice.

I might actually have a solution around the licence part. But for that I need certain estimates of volumes. Need not be crowd funded cause the setup cost is low. But it would need volumes to justify it's existence to the authorities.