Actually, it's encouraging people to pay more for entertainment items, such as music, movies, or television.
Games, movies, TV Shows, Desktop Software and Market apps; everything that is available for pirating, will be pirated. Sure, some part of it is due to the fact that they cannot buy-watch-use this material either due to them being delay for years or because they require Credit Cards while most Indians have a Debit Card but that is a very small percentage of the entire sales loss.
Therefore, Indians do not buy digital content as often as their US counterparts who are able to legally and easily.
You believe that this is some part of it. I believe that this is ALL of it. If media companies made it easier for people to get access to media easily and for a reasonable price, piracy will all but disappear.