I bought an iPhone 4 unlocked this August from Covent Gardern and wanted to use a Pay Monthly sim from Three which was not a micro sim. So I had to find a way to cut it down. I used a templete I found from the internet. This worked fine for me:
http://www.sosiphone.com/blogiphone/wp-content/uploads/2010/06/MicroSIM-template1.pdf
Make sure when you print out the template you don't select the option to Shrink to fit page otherwise it will shrink the image and the sim card and cut-out lines will not be the correct size. I used Blue-tak to stick the sim to the paper. Beware, if you draw the lines onto the sim with pencil it may rub off as you are holding it when cutting it. Before you even think of attempting this you should pratice on a few throw away sims you may have lying around as you dont want to destroy your main sim.
I dont personally know if an unlocked jailbroken iPhone will work on an Indian network but I dont see why not.
Also, worth noting that officially Shops that sell Sim cards in India may require some types of documentation from a customer before they are allowed to sell sim card. This may be due to countering terrorist threats, so you should research this.
One example provider in India is Airtel. They do a prepay sim which I believe you can also include internet allowance for 30 days top-up.
Wherever you get a sim from see if they will do you a micro-sim instead.
Finally, I dont think India suffers any more crime than other countries and authorities there can be strict in their law enforcement. Infact, I feel uncomfortable using my iPhone in public here in the UK than I would in India. I guess it can also depend on the area you are in at the time.
Good Luck...
