The currency in India is the Indian Rupee (INR). Indian Rupees can only be purchased in India and you should not take them out of the country. Most cash cards (Cirrus, Maestro, Visa Electron etc) are accepted at most ATMs which can be found in all major Indian cities. You will even find a few ATMs in the major cities in remote areas of India but we advise you take travellers' cheques if you are planning to go off the beaten track. All major credit cards are widely accepted but cash or travellers' cheques are preferred. Again, one should also not rely on being able to use credit cards off the beaten track. 

The US Dollar, the British Pound and the Euro are the most commonly exchanged currencies (in the form of cash or travellers' cheques). It is advisable to get encashment certificates for all money that you exchange which you can obtain from banks and any authorised Bureau de Change. If an exchange bureau cannot offer you an encashment certificate it probably means that they are operating on the black market (you will need encashment certificates for certain transactions and in the unlikely event that you have to make an insurance claim). 

Do not accept badly torn or damaged bank notes as it is likely that no one else will accept them from you. If you do find yourself in possession of damaged notes you can usually change them for good ones at any bank.