It seems a little sad and mildly (ok, very!) rubbish - but what they've done to that car would get 'respect' out there - it's only relatively recently that the 'big' car manufacturers have taken notice of the Indian market and it's growing middle classes who have money to spend on a car. The car they've modified in the video is a Maruti, which is an Indian-domestic brand of Suzuki - I think they're the largest domestic car make out there in terms of volume at the moment. Indian taxes favour Indian-made vehicles strongly over imports (something mad like 100% import duty, I could be wrong) so lots of the cars on the road look the same. Most are either standard or battered, but those that have been 'modified' do attract attention. In terms of what they say about improving performance, there's a lot of misinformation out there, and the public will often buy into a lot of hype. The situation will improve as/when the buying pubic start to educate themselves at large.
The upper-middle and richer classes can be a bit wiser to this - many that have the intentions will afford to do things 'properly' as they have the income to do so, especially when it comes to buying imported vehicles and parts. However, many still make the same mistakes, albeit more expensive mistakes, as they are misinformed.
There are some fantastic cars out there, some real exotic cars imported by the obscenely rich (either above board or off the books) - I even saw an E89 in the middle of nowhere driving down a dirt track from the beach when I was in Goa in February! The problem is that there isn't an infrastructure that supports cars with a decent performance. The road surfaces are great in some places (I found a fantastic fresh stretch of winding tarmac in South Goa, virtually deserted... yum! For that moment, I wished I had my Z4...) and non-existent in others. Parts availability for imported cars is a nightmare, the fuel is a bit ropey and the unofficial 'rules' of the road favour those that drive tanks (the biggest vehicle has the right of way, regardless of the side of the road - insurance isn't much good when you become roadkill).