Are hotels in India not allowed to drink water?

You'd better not drink the water from the tap.

India is heavily polluted, and yamuna river in Delhi is filthy, with white bubbles floating on the river, which once became a photo spot, like eastern India around Kolkata, where arsenic in the water exceeded the standard. Drink mineral water if you want. If you go to a restaurant, you should also order mineral water. Otherwise, you will get raw water.