To put it really simplistically : From the perspective of everything within India - PPP is what matters; because it takes into consideration the cost of living. But from the perspective of everything outside India - the absolute figure is what matters.
If we are talking of things from the perspective within India, then it doesn't make sense to compare to Japan? If I'm comparing to Japan, then I'm going outside and I should use the nominal GDP, right?
PPP is only relevant if your typical purchase is similar to that of the basket of goods used to calculate PPP. An iPod or a Toyota will still cost the same - irrespective of PPP - since they are global goods. (In fact due to India's laws they become much costlier in India with around ~30% increase if you convert money.)
True if you consider global goods. But for things that are produced within India PPP is relevant. Then again - it doesn't make sense comparing PPP when you are trying to rank economies on size.
