Nexus S does not come with Gorilla glass. So screen protector is needed to avoid scratches. Also it is not an Indian thing IMHO. It is a general consumer thing because people spend to buy expensive phones. So paying a little more to protect their investment is not a bad thing, In fact its a good thing.
Google "Gorilla Glass scratches" and you will see countless forums discussing about how they found smaller scratches on the screen here and there. While it is stronger, it is not completely scratch resistant.
@ OP: "When you said you found your screen guard yesterday" What do you mean by that? Did you put a new screen protector yesterday and you are having trouble? I think it might be with software issues as I use screen protector on my Nexus S and never had this problem.