You can include or exclude locations in the campaign settings within Adwords.  If there's a significant lead volume from India, and want to tune ads directly to them, you could duplicate your campaign(s) and geotarget them to India specifically, to get higher CTRs from those ads.  If you've upgraded to enhanced campaigns, you can do bid adjustments by location too, to easily adjust your CPCs by location.

The Adwords help article is here.  We usually refer to it location targeting or geotargeting if you want to search for it.

EGOL as usual is spot on.  If you're interested in going forward, here are a few good types of campaigns to get started with that are generally high ROI:

• Remarketing (generally for display advertising, and now for search!).  This will allow you to show ads to people who visit your site, or add things to their shopping cart and don't check out.  You can link your Adwords account to Google Analytics to use your goals and events from there to make this even easier (see here).  Since they've been on your site before, you know there's some extra interest in your products.
• Product Listing Ads.  Many merchants see a good return on these if you can optimize your merchant feeds properly.  These are the ads that appear when you search for a specific product, with the tiny pictures on the search results page.
• Brand advertising.  For example, if your company Acme sells trail running shoes, if someone searches for "Acme trail running shoes", they're going to see ads above your organic listings, and you'll lose some clicks to them.  You can pretty easily get your ad to the top of the pile because your quality score will usually be a perfect 10 for these keywords.

He's got the right idea, you shouldn't be serving these pages (unless you have a specific reason to).  The problem is these index pages are returning with a status code of 200 OK, so Google assumes it's fine to index them.  These pages should either come back with a 404 or a 403 (forbidden), and users then wouldn't be able to browse your site with these directory pages.

Disallowing in robots.txt may not immediately remove these from search results, you may get that lovely description underneath the results that says, "A description for this result is not available because of this site's robots.txt".

I think all the implementations work just about the same.  We chose to do it in our sitemaps because that was the easiest for our developer to implement.  You should choose one or the other, there's no need to do multiple implementations.