1. The driver accepts the booking, but doesn't start driving
2. They call the customer and try to negotiate a higher price outside Uber
3. If the customer disagrees they do nothing, with the expectation the customer cancels (as you can't book another driver until you do). I'm guessing they have a handful of different accounts on different phones and just don't care if one gets banned.
In Mumbai there was usually no issue with Uber (but there you can also just take a tuk-tuk), but in smaller cities without other options this was common, especially on longer trips.
The thing is though the price for longer trips are ridiculously cheap. When I was there in January, Uber calculated the same price to travel across Mumbai (1 hour) as from Mumbai to Pune (3 hours, without stops, and then the driver needs to drive home). It was around 1500 INR or 15 USD - I'm surprised the later trip would even cover the cost of fuel.
There are two popular ways in which khep works: drivers either request customers to cancel a booked ride before it starts and pay them directly, or they woo passengers on the streets by offering the same price as shown on the app, noted Ananya Raihan, a researcher associated with Fairwork, a labor project by the Oxford Internet Institute and WZB Berlin Social Science Center.