Subha,

If you check WordPress.com it shows all available Indic languages.

If you check WordPress.org, I think it is showing only Tamil (may be because as you said it is the only translation available and that too for Srilankan Tamil : )

But the point is: Even if you show all available Indic languages without resolving to the level of state and language, it is still good.

//non-controversial?, who are the ones who could decide on such a high impact sitenotice based on geolocation, this list?, meta admins?, English wikipedians of India? Though there is nothing wrong with intent, keeping banners for long needs some consensus.//

Sites like http://www.google.co.in/ highlight the available languages and it makes perfect sense for usability. If keeping a site notice for ever in all pages is a problem, do it only for the pages where there is an Indian language version is available and show only the links for the languages where a corresponding page exists.

Ravi