The price and price range of an IPO are determined by the company with the help of lead managers (merchant bankers or syndicate members).
SEBI, India's regulatory authority or Stock Exchanges does not have any role in setting the price for a public issue. SEBI validates the contents of the IPO prospectus.
Before they set the price, companies and their lead managers conduct extensive market research and go on road trips. If they request a higher premium, companies run the risk of an IPO failing. Investors may not like the company or its issue price, and they won't apply for it. This can lead to an unsubscribe issue or undersubscribed issue. Companies can either raise the issue price or suspend the IPO.