They should just shut their dev center in India and ask staff to relocate.
The government can easily block them, but the optics of that would not look right. So this whole play around law and regulations.
And companies outside India would further think twice before doing any business in india. Its not as if India has a stellar reputation for enabling global countries to invest in India.
This is a bigger issue than it appears and both sides can lose big based on the outcome.
It makes no difference. They can fine Twitter no matter where they are. If Twitter refuse to pay they can sanction any business using Twitter basically killing Twitter in India. Twitter would do almost anything to make sure this doesn't happen.