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1. In March 1977, India will have elections. Support the Opposition so that Ghandi doesn't win.
2. Create your own Military Alliance when you're ready (the event fires around June 1979 if you created your own Economic Alliance but you can however create this after 1979 with the buttons found in the Doctrines tab. Create this Alliance only when your ready as you will need a lot of resources to keep your Allies together).
3. Around July 1979, India will have elections again (if Ghandi won, there won't be any). DO NOT support either wing of the Janata Party and abandon it instead!
4. Sometime around 1980-1985, support the Naxalites (this can be done once a month) until their Influence is 80. Additionally, 10 Influence can be added here if you blockade support to the Afghan rebels (provided there is a war there), but that's not important.
5. Make sure China still has the Maoism Modifier (if you're not reforming China, this is not concern).
6. Once Naxalite Influence hits 50, there will be an event about the Naxalite Insurgency. DO NOT invade India! Just ignore what's happening.
7. Once Naxalite Influence hits 80, click on the Indian Gambit Decision in the Decisions tab (it's right next to the South American map). I must warn you, though: this Decision is VERY expensive when it comes to Money (about 50), Agents and Military Strength (both about 150, I think. You can check the conditions), so do this only when you have a very well developed economy and a lot of spare resources (for other events and interactions)! Also, relations with the US will take a nosedive to 0 immediately so be ready to deal with American backlash too.
8. As soon as you click that decision, an event will fire. Choose any option you wish (personally, I prefer the top one with the urban support but you can save the game right before you click the Decision to see the aftermath of each option). A Civil War will break out. If you choose the first option, then you must support the United Front (the USSR will also support it). Once the United Front wins, India is all yours (you can take Nepal, Bhutan and Sri Lanka now).
9. Once India is yours, be prepared for the Allied Crisis event as India starts out with almost no loyalty to you (without your Military Alliance, you can't use the Army to bring it back).
10. After following the steps above, if you want to take some territory from India, click the Agreement button on India to grab the territory from India without force (this costs 25 Money, though).
Hope this helps :)