The genetic & cultural differences between two random Indian provinces is probably far larger than between Sweden & Norway.

You are right.

Only thing that needs to be changed is instead of taking population of a country as a metric, should consider race, language, and particular god the applicant believes in as a metric, if it is truly "optimizing for diversity".

The way it stands, all Caucasian, Jesus believing (or not believing) europeans or the Arabic, Allah believing (or not believing) middle-eastern populations have no line, but wide variety (language, god / religious belief, race) of people from India have a long line, because its been "optimized for diversity"

Its just an "Indians and Chinese Exclusion Act" similar to Chinese Exclusion Act under the garb of "Diversity".