The RBI (Reserve Bank of India) has made it mandatory for all online transactions in India to require two factor authentication. As a result of this, merchants can not use the recurring or subscription billing option for Indian customers.
Most online/cloud based software products use the recurring billing concept, i.e a user enters their credit card in to the system and they are changed a fixed amount every month automatically. This is a huge problem for the start up community in India, as they can not sell SAAS based products in India. There are many posts which talks about this, however as of now, it does not seem like the RBI is going to change this rule.
However, there are a few ways that you can get around this issue.
Option 1: Set up a company outside India: This is not an easy solution, however you can set up a branch office or a subsidiary in another country, with the sole purpose of collecting payments. Here is a blog post that tells you how to do this.
Option 2: International Payment Gateway: You can use an international payment gateway like 2Checkout. However their transaction fees are quite high – effectively over 6% by the time the money is converted to INR and hits your bank account.
No, recurring billing is not supported by any payment gateway in India as RBI has mandated 2-step authentication. In your case, there are two solutions available. First is to go for 2chcekout. However, they cater to only specific categories. The other solution that you may want to look for is to go for any Indian payment gateway but model the subscriptions with a quarterly, semi-annually or yearly plan. It would at least save the hassle of customers having to enter their card detail every time.