If you cannot use it for anything, and maybe it's illegal to even own it, why acquire it in the first place? It is demand that decreases. Supply that goes down simply to match lower demand does not necessarily outpace it and produce an overall price increase.

The difference between this and something like the 1920s alcohol black market in the US is exactly the point that people are raising when they talk about cryptocurrency lacking fundamental value. Alcohol has fundamental value (it is a drug with some effects that have proven to be valuable to many humans for thousands of years), but a currency does not have any value in isolation. People didn't stop wanting alcohol when it was banned, but they will stop wanting a currency if it is banned. It will not have a similar "constrained supply driving up the prices" effect to black market alcohol, because alcohol's demand never wavered but demand for cryptocurrencies will. It is not irrational to buy black market alcohol that you can drink or sell, but it is irrational to buy black market currency that you can neither drink nor sell.

This is all made generally moot if India is the only place to ban it, because they won't make a huge dent in the global market.