The IOI regulations state: "Students who are studying abroad may represent the Country of their nationality."
So, if you are an Indian citizen, then theoretically there should not be an issue. But there are practical issues like where to give the first rounds of the contest, etc. You'll have to get in touch with ICO regarding this. Send an email to email@example.com detailing your situation.
There has been at least one instance in the past where an Indian citizen residing outside the country went on to IOI, representing India. So this is not a very rare situation.