On 25 July 2015 at 12:22, Dean Michael Anderson via INDOLOGY <indology@list.indology.info> wrote:

Many other texts from this period also "cite" previous authors, such as in Caraka. But I will leave that to scholars more knowledgeable about those texts, like Dominik.

The majority of early Sanskrit authors in all śāstras and genres cited their predecessors and understood and used​ the methods of quotation and citation well.  Not quite as we do today, but in their own perfectly acceptable ways.  In fact, in a manner similar to that of classical authors in the European tradition (see, e.g., Reynolds & Wilson, Scribes and Scholars, passim.).

Malhotra's assertion that "there are no quotation marks in Sanskrit" was a knee-jerk "the dog ate my homework" kind of self defence.  I expect he regrets it, and knows better, in truth.  It's nonsense and not worth discussing further, really.

As an example of serious work, the ongoing research project "Fragments of Indian Philosophy" of my colleague and friend Dr Ernst Prets at the Austrian Academy of Sciences is based on the discovery and evaluation of quotations in Sanskrit philosophical works.  In his project application, Dr Prets noted,

The main aim of the proposed project is to make an attempt at comprehensively collecting and analyzing the quotations and paraphrases from and allusions to the texts of the Sāṅkhya, Nyāya, Vaiśeṣika, Mīmāṃsā, and Lokāyata traditions with special reference to early epistemology, logic and dialectics. Another major goal of the project will be the systematic search for fragments of texts in the philosophical Sanskrit works of the Jainas, specifically in the works of the Digambara Jainas.

In addition, the project will investigate the Indian convention of quoting and referring to earlier works or views as an element of composition in other branches of scientific literature.

​Sincerely,
Dominik Wujastyk​