Well the idiocy continues and unfortunately reigns supreme.
Per this thread on Medium, the final word is that one needs to be present in India and show up to a interview at a local office in order to move ahead in the application process.
Please note that you have to complete the India side verification process as mentioned in www.passportindia.gov.in , which is must. You may provide your India permanent address where verification can be done and also you need to appear for in-person interview, biometric capturing etc. in India only. This can be done whenever you visit India or as per your convenience.
Golok Kumar Simli
Chief Technology Officer
follow me on twitter @ctopassportseva
Guess its time to apply for those refunds if you cant make it to India in the next 12 months.