I am thinking India is playing a wait game, when they see that the opportunity is better to legalize it, they will do accordingly.
One more thing can be seen that due to the fight for corruption, they feel legalizing it will increase the black money in India.
Yes, of course people will use Bitcoin for speculation purpose and it Bitcoin get legalized in India, then a heavy tax will be imposed on it so that it wont be used as an instrument of money-laundering.