It's honestly a shame that a company so dedicated to making private chats universal is going to completely kill their entire reason for existing and all potential growth by removing SMS.
I am not sure I follow your argument. If you are using it for private (ie encrypted) chats then you should not be using it for SMS... I think they have a good point when they say that having SMS there tricks less tech savvy people into think that those messages are secure as well when they are not.
Nobody in india uses SMS to communicate, it is solely used for verification OTP. It's never been a thing, so not sure what you are talking about.
It's not a thing now, but it used to be a great deal to thing around 2006-2008. 1000 sms packs used to be sold for 36 rupee and they sold like hotcakes.