For any travelers to India seeking a local SIM Card:
1. Assuming you have a handset that supports GSM and is not locked (attached to a specific carrier like AT&T or Verizon), you go out to buy a SIM Card.
2. Although you can get this from any dealer for Airtel, Vodafone, VSNL, etc; be sure to get it from a store that you can access easily for the next 2-3 days, because you may need to go to the dealer a couple of times during that time.
3. Get a prepaid card. If you pay upfront to recharge this card over and above the minimum balance that the card gives you, get a receipt for this.
4. Be sure you have (a) documentation- basically a copy of your passport with the photo and bio pages as well as the India visa page and the page where your address is shown, (b) 2 passport size photos; (c) an address where you are staying (some dealers may ask you for proof such as a hotel invoice); and (d) a friend or contact whose cell number you must give- the company will call that number for verification and will later send a text message to the number that your phone is active.
5. It will take a minimum of 24 hours for the reference/verification to be done. After this your contact will get a text message requesting that the prepaid SIM buyer (you) call a number from the phone to activate the number.
6. When you call the number they will activate your number and after a 30 minute =delay you are in theory up and running
7. In reality you may find, as I did, that your talk time balance is Rs. 0, and you cannot make any calls. You can call the customer service number but they will direct you to the store from which you bought the card. You will need to check with them about the money you paid for both the basic SIM Card pack (there is a minimum talktime balance attached to it) as well as any recharge you made.
Then they will call Airtel and get the card recharged with the balane you are due.
In short what should take a few minutes will take you over 48 hours. Be prepared for this if you decide to buy a SIM card in India