More than a hundred thousand dengue cases are diagnosed in India annually, and about half of the country's population carries dengue virus-specific antibodies. Dengue propagates and adapts to the selection pressures imposed by a multitude of factors that can lead to the emergence of new variants. Yet, there has been no systematic analysis of the evolution of the dengue virus in the country. Here, we present a comprehensive analysis of all DENV gene sequences collected between 1956 and 2018 from India. We examine the spatio-temporal dynamics of India-specific genotypes, their evolutionary relationship with global and local dengue virus strains, interserotype dynamics and their divergence from the vaccine strains. Our analysis highlights the co-circulation of all DENV serotypes in India with cyclical outbreaks every 3-4 years. Since 2000, genotype III of DENV-1, cosmopolitan genotype of DENV-2, genotype III of DENV-3 and genotype I of DENV-4 have been dominating across the country. Substitution rates are comparable across the serotypes, suggesting a lack of serotype-specific evolutionary divergence. Yet, the envelope (E) protein displays strong signatures of evolution under immune selection. Apart from drifting away from its ancestors and other contemporary serotypes in general, we find evidence for recurring interserotype drift towards each other, suggesting selection via cross-reactive antibody-dependent enhancement. We identify the emergence of the highly divergent DENV-4-Id lineage in South India, which has acquired half of all E gene mutations in the antigenic sites. Moreover, the DENV-4-Id is drifting towards DENV-1 and DENV-3 clades, suggesting the role of cross-reactive antibodies in its evolution. Due to the regional restriction of the Indian genotypes and immunity-driven virus evolution in the country, ~50% of all E gene differences with the current vaccines are focused on the antigenic sites. Our study shows how the dengue virus evolution in India is being shaped in complex ways.