If India is not a market for China then China won’t support Indian development (FDI, cheap ingredients needed for Indian value added industries).
By kicking out the Chinese, India will have fewer investors, and it will have to take worse terms for investments. If India doubles down and builds up against China, especially by bring in the Americans or the Quad, China will be forced to use its influence to try to contain India and double its support to India’s rivals. Both Countries will be spending otherwise unnecessary resources. Hence why India has accepted Chinese control of territory in hopes of restoring the relations as much as possible.
The more money India diverts to challenging China, the less India will spend to develop the economy, now more than ever.
India is cutting its losses before the situation gets any worse. For China, if India “is not at the table its on the Menu”