Hey Srikanth,
Just weighing in since I also happen to be supporting this process. Perhaps a little background is necessary to know why MediaWiki groups have been started as an initiative. Also copying Quim since he might be able to shed more light on this issue. As I understand from the proposal page, this is a part of the new direction taken by the Foundation since the "narrowed focus..." It was suggested that more impetus be given to help build and support technical volunteer groups just like all cities and countries have their Wikipedia, Commons and other communities of interested volunteers.
I am also witness to an IRC conversation where possibilities of setting up local groups versus national were considered. As the highlighted in the discussion, I believe that it would be best for volunteers to work in local proximal groups (like MediaWiki group - Ahmedabad for instance) also with a language focus possibly (like several gadgets have been added to Gujarati Wikipedia as a run up to the group and so on). I believe the MediaWiki India mailing list which hopes to link up communities across the country is up and running now. As far as I understand forming specific interest groups doesn't require a formal identity or does not encroach upon other parallel entities' activities or privileges.
Just trying to fill the gaps since you might not have the background on MediaWiki groups conversations. Maybe Quim can correct me if I a mistaken.