RPGPundit is developing an OSR game set in fantasy India. He has reserved the right to not follow the myths exactly, which I think is a very good idea.
I've read the Ramayana, but that's the extent of my knowledge on the subject. I have to say I'm kind of interested. If nothing else, I can steal stuff for BFRPG and S&W.
Stuff I've read that sounds great: monkey people, D&D style classes, race and class are separate, ascending AC, and the various styles of magic (he's only shown a little of this, but it looks cool).
He's also aiming at game play and not trying to create an anthropology paper, which I think is a great idea. From what I've seen, it will be D&D with India trappings, and not a 300 page treatise on the inner secrets of Brahmins (something Glorantha and Tekumel have veered off into, much to their loss).