Isn't that true already? My friends and I have been able to use local bank debit cards and they work as expected on international sites.

Well yes and no. The vast majority of Indian credit and debit cards don’t work outside of India. You need to get special permission from your bank to be able to use an Indian CC outside of India [0].

0. I have to say that I have not looked into this in detail in the last 12 months so if things have changed with the RBI I would be very happy to know.