It's a policy based on unsound reasoning. Why is India treated as a monolith when it is more diverse than the EU in terms of linguistic and cultural diversity? If tomorrow India magically broke off into 30 separate states, all the same people who have been waiting for decades would be immediately eligible for green cards. How does it make any sense?

H1B program is also diversity program, much like green card lottery…

Diversity based on country of origin doesn't make much sense, though.

That is exactly what diversity is when it comes to immigration, the freaking yearly green card lottery has diversity in the name of the program https://www.usa.gov/green-card-lottery

And yet the tech industry is far from diverse. It is predominantly male, white, and Indian. Did the US H1B program have an effect on this? Were some groups squeezed out even more from the tech industry due to H1B? For example, would there be more Black people in the tech industry without the H1B? More women?

You might be right, but if u see the real situation Indian manager prefers Indian worker mostly. And it is mostly 2-3 states, not every states.