I'm american , I was born in Sri Lanka.
I married a Swiss several years ago and had to go through similar ,"run around the tree five times going 'ooga oooba iggy iggy pop pop' to prove your worthiness", sort of an ordeal at that time,
Your current trials do touch a sympathetic nerve.
Heres a sum up of my particular trips around the ooga ooba tree.
What I had to go through to get my marriage to a Swiss ratified
was to provide notarized translations (into a national language) of my Sri lankan birth certificate, (which I didnt understand cause i have a US passport), Provide Notarized translations of my previous Marriage certificate, and THE ENTIRE DIVORCE agreement, (several pages as you can imagine),
and Notorized tranlations of the new marriage certificate (we got hitched at the lonely hearts chapel in reno special price this week only $39.99).
We did all the translations our selves after acquiring the documents, as all the documents were in english, including the (colonial) birth certificate.
The translations were approved and attested to by a Swiss notary\translator\lawyer It was all done through a swiss notary,
The authenticity of the documents needed verification and separate attestations, however.
Unlike what you have been told, I was never asked to provide funds so that THEY could go through the verification process.
It was up to me to provide the necessary documents with the appropriate attestations to authenticity by the respective authorities.
For example The marriage certificate had to be a special attested notarized version from the marriage authority in Reno.
The divorce agreement, my copy wouldnt suffice, I had to get a notorized copy from the courts in CA. which bore their seal.
The birth certificate on the other hand my dad actually attested to. For the sake of expediency (rather than talk to Colombo and wait and wait) he, my father wrote an attestation to its authenticity in the presence of a US lawyer\notary and I presented that notarized 'authenticated' copy.
Which they accepted.
I could imagine , should they have rejected that one, that we'd have had to have called the Registrar of Births in Colombo and would have had to have them send us an attested copy via the Sri Lankan embassy or something. (Which I would be quite surprised to hear isnt infact an option in your case.)
I would suggest, perhaps, that you ask them to specify exactly what sort of 'authenticated' versions of which documents they would consider satisfactory and make the arrangements to get them from the indian authorities. Give it a shot.
I cant imagine them trying to corner the market on document authentication or anything. Im sure theres a way to provide them with the docs they're looking for. Without having to hand over stacks of greenbacks.
The docs whatever they be will almost certainly require translation to one of the local lingos however. Which would mean paying a local notary\translator to attest to a translation. (either he translates or you translate and have him attest to the fact that its an accurate translation, in your translation remember you have to describe the official seals and stuff. ie. you would say something like ' Circular embossed seal bearing the words 'Registrar of Births Calcutta ' blah blah )
Some of the Oooga Ooba is nonsensical and redundant no doubts about that , but In this country ,in more cases than not , you'll find that its run by an efficient and even sympathetic beaurocracy, with rules and regulations that for the most part make good sense.
(Here come the boos and groans!!)
I wish you lots of luck and patience. It'll work out in the end.