Rules don't allow it, confirmed with a friend running a India focused hedge fund. SLB is there, but don't know how retail traders can access it. What I know of shorting cash in Indian markets is that institutions sell a part of their holdings and buy back at a lower price. Say, I have 1000 shares at Rs 10 each now. I sell 500 at Rs 10, and buy back later at Rs 5. This way my average cost is Rs 7.5 instead of Rs 10 for the full holding.
This is the reason why there is such a big discount in some of the futures, nobody is able to exploit it, otherwise it shouldn't exist in an ideal market.