$35 India Tablet is Real
You can catch the NDTV interview with Vikram Chandra and Rajiv Makhni, where he confirms that manufacturers can indeed supply $35 tablets if a million tablets are ordered. These would be for direct supply to Indian universities at this subsidized prices for students. Of course retail prices in the market would definitely by higher, Catch the interview on NDTV below.
The 35$ (Rs. 1700+) gadget has 2 Gb RAM, runs on Android platform (which is open source), has 2 USB 2.0 ports, wifi, SD card slot, a TV out and a camera with a cool touch screen. NDTV guys got a hands on view of the $35 India tablet (often publicized as laptop).