Paypal allow INR conversion.
Iam using paypal for more than 3 years and no problem at all.
When paying You can choose currency conversion option.
Or you guys can list the prices in usd Option also.
Paypal allows , Indian bank withdrawl and support the international visa/master card like PNB/SBI/KOTAK debit/atm cards.
Checkout the website for more details :
www.paypal.com/in