It makes little sense to buy a new iphone in India for most of the mid-to-upper middle class folks. Not only are they more expensive than in the US (any maybe Europe), there is very little official support for iPhones outside of the metro cities; even there Apple only recently started providing support on even a smaller scale. There are very few carrier plans as in the US. Also, most people don't need the latest and greatest; older phones work just as good since Apple phones last longer.
In this light it is little surprise that the used market is booming.