SIM for India
BSNL has the most extensive network. Till 10-12 years back BSNL was the only (Gov owned) land line telephone service provider. Which left them in the possession of an extensive network including most remote places in India. It was easy for them to ride on that and start providing cell phone services all over India. And they did that. BSNL is still largely owned by Gov of India so don't expect great service but they have definitely improved in last 4-6 years. You can get their SIM at BSNL authorized dealer or at any BSNL customer sevice center. They cover any and every city and town where they have land lines services.
Now slightly bad news once you are outside the cities in no man's land (especially on a trains) they have almost no coverage. They have coverage on major highways. But on secondary highways they cover you only when you are in and around a city / town. Having said that, I didn't find this to be a major problem during my recent visits.
Airtel and Hutch have pretty good coverage at such no man lands, but only in the regions where they have services and network. Except BSNL no other operator operates all across the country.
For most operators incoming call is free in the home area. When you go out of your home area you are on roaming either with same provider or with another provider. You pay for incoming calls also and pay roaming charges on top of it, which makes both incoming and outgoing calls expensive.
On BSNL as long as you remain in the same state all your call are local and incoming is free. When you go to another state you are on raoming with a different BSNL circle. And you pay 2.00 INR for each incoming and outgoing call. And I assume you are billed for incoming call also (like others).
I was recently in India for a month and I used BSNL very extensively (as I pleased) in Maharashtra, MP, UP, Bihar, West bengal, Karnataka, TN etc and my total bill for 1 month was about 1500-1700 INR (about $30-35) which I think is not bad.
I would recommend that you check with local people about the best operators in the place you are going to be in. If you are going to be at several places check all of them and come to a common denominator. And if you are going to be all over India, don't get into hassels and just pick BSNL.