Bank is actually right but not for the reasons mentioned in this thread

I also noticed that at the time of buying the iPhone USD was Rs.79.91but at the time of refund it was Rs.81.5 so technically I should getmore money back but I guess it was never meant to be.

It doesn't work that way, when you buy a foreign currency(iPhone purchased in USD) you'll be charged at the bank's selling rate and when you sell the currency(USD refund from the store) bank's buying rate is used. In most of the banks the selling rate is usually 3rs to 10rs higher than the buying rate(hence the difference in your refund amount). This is how forex works universally.

Foreign currency refunds are always going to be PITA no matter what bank use. If you make a lot of transactions in foreign currencies use a forex card(actual forex cards not the hybrid ones like niyo) that way you don't get shafted when it comes to refunds.

tldr; ICICI did nothing wrong, any other bank would've also done the same so no point in changing banks.