Update (Sep 26, 2008): New Delhi based OpenLx now provides Koha support in India
The Government of Kerala has recently made a decision in principle (huh?) to make Koha Integrated Library System as its official software for computerization of libraries under Government control.
Elsewhere Vimal mentions others who use Koha here in India.
In West Bengal, 100 college libraries and one university library is using Koha according to Dr. Parthasarathi Mukhopadhyay, Department of Library and Information Science, University of Burdwan.
Another good news from Delhi Public Library, they implemented Koha for its OPAC.OPAC is accessible from here. DPL is the first library in South Asia using latest version of Koha (version-3). The persons behind this effort are Mr. Amit and Mr. Sudhir (Indserve infotech Pvt. Ltd). Contact email of Amit is amitddng135 at gmail.com