The Navy guy I shared a room with had some interesting info to share.
About 10 miles from Smith Island (where I camped), is East Island - an Indian navy outpost. Most of his colleagues have to spend 2 months on this island as part of a rotational service - 2 men, sitting in a building by themselves on an island, alone with a few DVDs, and a pile of submarine monitoring equipment. 2 months with little contact with the outside world.
And the reason they have to do this?
Because China has a military base 20 miles away. One or two of the northern Coco Islands were given to Burma after India's independence, who later leased the island to China.
Thus, the area that I was illegally camping was a semi militarized zone - and thus it sorta makes sense why India wants to keep such close tabs on the foreigners visiting.