I wonder whether they can produce them for $35 in a massive scale or the cost keep inflating like the OLPC
This tablet is probably what OLPC would look like if it started today.
The main barrier to the success of this device is that since it's a government project at least 50% of the budget will be siphoned off into pork barrelling, ministerial pet projects and 'consultancy fees' to close friends and relatives of the politicians involved. Unless of course Indian politics is unlike any other variety.