One of the main reasons India is not CC friendly, is it's requirement for TFA (with OTP over SMS) for every CC transaction. Most systems, apps are built with the 1 click behavior (amazon, iTunes etc) or no click behavior (Uber, Lyft etc) to charge the customer's credit card, any amount at the end of the ride.

Even if the pain of entering CC info for every transaction is addressed, the requirement for OTP messes with the UX, that is so critical for the kind of e-commerce you see in US.

The OTP regulations in India wrt online card payments are very much required and go a great extent in reducing fraud.

Another reason for cash transactions: Indians just have a lot of cash.
a) A person with 100% white money tends to carry a lot of cash, and would rather pay cash to the shopkeeper and both are benefiting from not having to pay a transaction charge.
b) A person with a lot/some black money, has no option but to spend money using hard cash, for anything and everything being purchased!

"Most" of the affluent people who have the spending power, have a lot of black money to spend. No matter what you do, they have no way to spend that black money using a credit/debit card. A solution may exist, if India has GreenDot like prepaid reloadable cards.