i think it's because india is SO HUGE and never served much purpose in previous HOIs.
- Egypt is a complicated area where puppets would make things harder for the AI to manage (same reason we dont have manchuria as well)
- Making india a puppet helps with controlling the strength of the allies because as Uk you do not have direct control and up to date techs. it also ties into focus tree gameplay.
both are gameplay considerations. Historical plausibility is pretty important as someone said for immersion. but it is also behind actually making fun and challenging gameplay. Historical Accuracy, is somethign else and is much further down the priority list (and is often impossible since all simulations are approximations)