US law doesn't allow you to use religion to provoke violence either. Provoking violence is not protected speech under the US Constitution. Stopping people from "hurting religious feelings" is not the same thing as disallowing the provocation of violence - laws like that are supported by religious organizations specifically so they can silence criticism.
But the US has never had a (significant) legacy of religious violence. India has been plagued by religious violence for centuries, and therefore religion is justifiably a sensitive topic. These laws are intended to prevent, for instance, a Hindu fundamentalist sect from insulting Islam and provoke violence that way. They were never intended to be used by a well-funded global organization to silence a critic.
The law in question was put into place by the British Empire in 1860 - I think it was very much intended to be used by a well-funded global organization to silence critics.
Last I checked, India gained independence in 1948, in an environment when the British whipped up hatred between Hindus and Muslims in a last ditch attempt to hold onto power and which resulted in the partition of India. So, regardless on who initially passed the law, there is a somewhat justifiable rationale for having a law against whipping up hatred. As always, this doesn't justify this particular case. If I were an Indian nationalist, I would be using this case as propaganda against the Vatican and the church in general.
Its 1947, not 48, and you cant really blame the British for stirring up religious hatred. The Indians where perfectly capable of doing that themselves.
Anyway, India is a democracy and no democracy can justify having such a law, no matter what the original intent of this legislation was.