Hi,
I'm from India too and had the same problem with my site. After wasting four days and doing more than dozen chats with shopify and paypal team, finally I found a workaround for this problem.
If you change the store address in admin > settings > general to a fake AUSTRALIAN address and try to integrate the paypal checkout again, it will work. This will most probably work for everyone else in India too. This is a Shopify integration problem and I have let the Shopify and Paypal know about this too. They might solve it within a few days (or months!) but this can be a solution till then.
Also you can revert the address again to Indian address once your site is activated for PayPal. It won't affect the integration! Hope it helps. Good luck 
