Local journalists are still free to write for foreign publications. What stops them now?
From what I see, this rule is trivially bypassed.
Imagine BBC UK having a India section, and buying stories from Indian journalists(which they already do).
I don't know about India specifically, but in many countries working for the press gives you some special status. You are not supposed to be attacked by the police during protests, government officials owe some basic comment to you etc. Basically rights that allow you to do journalist's job legally and relatively safely. Foreign media probably don't enjoy the same privileges.
Also, when your freedom is being taken from you, finding loopholes doesn't really work in middle/long term. The regime has all the possibilities to close them one by one.
Why would that be a problem?