Recent sale of diapers.co.in makes be believe that corporations will go after both extensions .in and .co.in, for strong keywords.
It's not just Indian corporations but companies from the US, UK, Germany, Korea, Japan and others who want to have a presence in Virtual India will go after these domain names.
It helps to have UK use .co.uk and it reinforces the .co.in usage in India. The british influence or relationship with India is undebiable even with the recent close relationships with the US (atleast that is my thought process)