Of course, Overseas Indian Citizenship isn't really dual nationality. There are a number of restrictions:
-Overseas Indians don't get two passports - they basically get a stamp in their US (or whatever) passport that makes them overseas Indians.
-They can't vote
-Can't stand for public office
-Can't enter public service (ie, work for the government).
These are unlikely to matter to most people who will apply for this, because AFAIK, this is still enough to enter India without a visa, live in India indefinitely (not sure about this), and own property and business with the same rights as an Indian citizen. (An interesting question is whether some of the Rights in the Indian Constitution which apply only to citizens will be available to Overseas Citizens..my guess would be no..)
Basically, the scheme doesn't allow foreign citizens to become Indian citizens as such - it creates a new class of "overseas citizens" who have some of the same rights as citizens.
However, unless the current government has modified the Overseas Citizenship proposal (which originated under the previous government), there is a more serious flaw, which is that only (Indian origin) citizens of Western countries were eligible to apply. So, for example, if you were of Indian origin, and you had a South African passport, you couldn't apply for this. (Not sure if this is still true, but it was, when the scheme was originally announced two years ago).
I think the same too. Especially because of the clause stating only citizens of Indian origin in countries which allow dual-citizenship within that country, are allowed to hold a dual citizenship in India. AFAIK, only the US and a handful of other western nations allow this.