> The correct analogy would be a foreign country requiring U.S. banks to send them data on their own citizens abroad. Which, I think, e.g. India could probably do.

India does get information from the US and other countries about Indian residents having accounts (bank, brokerage, etc.) in other countries.

There are agreements across several countries that use CRS (Common Reporting Standard) to report such information to other countries for tax purposes. This is not India or US specific.