The service is still available but it looks like Google has more or less abandoned the project. The homepage of Google Music India has not been updated for a long time and newer hindi movies such as Agent Vinod, Kahaani, Houseful 2, Blood Money etc which are very much part of In.com and Saavn is not listed in Google Music.
Google has revenue sharing arrangement with music companies and maybe the ad revenue was not much convincing for partners.
Luckily, you can find Indian songs in the internet without Google Music from Saavn, Gaana, Dhingana.
