Why not try other brands? Something like Sony Ericsson X10, HTC Desire, HTC Incredible, HTC Legend, Nexus One, etc. Those phones run on Android. I guess there are many Android phones available in the market that maybe within your budget.
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You can try Samsung Galaxy Spica (i5700). It costs aroud 12.5k (INR), has android 1.5 (can be upgraded to 2.1) and is a decent phone. Battery life is little on the lower side but IMO the adv outweigh that.
Gifted one to my brother and he seems very content with it.
PS : Is there a way to type the symbol for the new indian currency?