In fairness to the Indian government, stopping crime is a very hard problem. Societies spend hundreds of millions of dollars on this, and still have crime to deal with. Part of this is because the money is spent on flashy visible programs rather than ones which have a strong evidence base, but even the best programs cannot eliminate crime, only reduce it. So saying ‘they should just stop the Bad People doing the Bad Thing’ is completely ignoring the difficulty of the problem.
That said, this step won’t help anyone at all, so it’s still a dumb thing to do. That said, if Proton does not adhere to Indian law (for example, if it’s prohibited from doing so by Swiss law) then what would you want a government to do regarding a company which is not following the local law? I don’t think it’s necessarily as clear as we might like it to be.