The discussion here is a good look at some of the complexity. I disagreed with some of the innuendo of the article but basically the notion of helping fund external space capability is complex. The goal of the Regan administration appeared to be to enable commerce with countries that already had a certain level of technology without risking destabilizing their own industry.

So imagine that what you're trying to achieve is this:

Allow companies that want to use rockets for their business purposes to buy capacity from other countries when your local capacity is maxed out, but don't take money off the table of your local capacity which is using that revenue to drive development and research. That is what the treaty was all about, can you imagine what would happen if the Chinese (for example) subsidized rocket launches for third parties like they have solar cells, or rare earth materials? Nobody would pay full price for launches locally, there would be no local business, and local rocket companies would shut down. (We've already seen this in other businesses) Now China decides to no longer sell those services or raise the price astronomically? (remember they did that with rare earth materials?) Now you are in a really tight situation. The whole RD-180 engine issue is exactly this problem.

Challenging indeed. So India could "fix" this by signing on to the treaty and agreeing to the restrictions. They choose not to it seems (I have no idea why) and so they are excluded. Is that a US policy failure or an India policy failure?