The company should stand firm. It has three important factors on its side — the law, its own principles and its reach.
First and foremost, Twitter is correct in saying that the orders from the government are not “consistent with Indian law.” If any Indian is denied access to the internet by government fiat, they are supposed to be given a valid reason, in writing, so they can then challenge the order in court. In this case, it’s hard to see how an unfounded accusation, inflammatory though it was, justifies a “reasonable restriction,” as the Constitution puts it, on online political speech.