Update (October 20, 2012): After toggling on the matter, finally it has been announced that Indian developers would be able to offer paid apps.
Earlier it was reported that the Indian developers would now be able to sell apps in the Play Store and that India had been added to the supported list of countries where Google Checkout is supported. Though there was no formal announcement regarding the same, it definitely gave rise to some suspicion. Some developers said that the process for Google Checkout was still not working for them even when India had been added to the list. Now Google has just backtracked from this development and removed India from the list.
Google has not yet made a clarification on the topic but it is expected in all likelihood that it might make a formal announcement in the upcoming few days after the logistics of the same are worked out. As of now, most of the Indian developers should be back to square one i.e. being stuck to Ad monetization or setting up a subsidiary in countries abroad where it is supported.
This is expected to either be due to a mistake of some employee or the support for India is indeed in the pipeline and this just might be due a temporary glitch. Though none of this has been confirmed yet, if Google does not seriously open up support for India, Microsoft will most likely grab the chance with its recently conducted AppFest which attracted a lot of developers, many of whom ended up getting their apps published in the Windows Store. With the new Windows Phone 8 release coming soon and RIM working on its new BB10 OS, app developers do have a lot of choice on their hands.
Now they have again added India in the list. Please update your article :)
Thanks for the comment. Update was in a recent piece, link has been added to the older post.