East Indian rosewood is a widely distributed species. Sure, it's harvested in India, but it's also harvested in most southeast Asian countries, as well as Madagascar and parts of South America.

The author of the above diatribe makes it sound like the Indian government wants American companies to set up manufacturing facilities using Indian craftsmen to build guitars. I would be astonished if that's what the law really says. It probably only requires that Indian workers do the basic sawmill work of converting the logs into boards, billets, and veneers before they're sold. Gibson probably bought a bunch of illegal logs with the intention of processing them at their own sawmill when they should have bought legal boards and billets instead. Or they should have bought legal logs from Cambodia or Thailand.