You can withdraw Indian Rupees from most ATMS, there are many international banks available in India. Fees may apply depending on your bank or credit card provider. It is recommended that you let your banking and credit card company/s know (in advance) that you are traveling to India. At that time, ask about their foreign transaction fees.
Exchange US dollars at India banks; there are better rates in small exchange outlets. Ask your guide for the best places. Some hotels may also exchange money.
If you are entering restaurants as a group; splitting up the bill could be tough due to the different currency. Unless otherwise arranged by your guide, it is advisable to ask for separate bills before ordering in order to pay individually.