IAF is looking to build "super sukhois" out of MKIs to upgrade them beyond what su-35 is for PLAAF. They probably know PLAAF bought a handful to see how the latest flankers performed and what the electronics are like. I bet the su-35 avionics and electronics are mostly superior and more modern than what the MKI has. Makes sense for IAF to negate this PLAAF advantage. Not sure why they are chasing an arms race with China though. An economy and country several times more wealthy will always outgun one that is many times smaller, poorer, and less developed. Won't even talk about industry and manufacturing of own weapons. It may be a political thing and related to their elections and Modi's image but China will never attack India or create any false flag reasons to do so. Reason is they've never done so in past. Of course I'm not talking about border disputes and conflicts but I'd bet the house that PRC will never invade undisputed parts. Disputed parts have been disputed for decades and some have been unsettled issues for more than a century. So it's not like PRC invents disputes out of the blue and uses it as a reason for invasion. Nor do they pretend to get hit to justify an attack (gulf of tonkin and the dozens of other USA invented nonsense to justify war). So going by track record and trends, it doesn't seem like PRC wants war at all even when they outgun others. The CPC seems to think they need to hold up a certain image to smaller non western nations around the world as a non imperialist and non aggressive up and comer.
J-20 and all the military progress made in recent decades is tooled for defending the mainland against encroachment from USA and its minions. They don't want to end up like Russia. It's also useful for domestic propaganda and nationalism. China hasn't used any threats to assert dominance and force policies or change on any other weaker nation. They've always used the carrot rather than the stick. However they have responded to military threats vis-a-vis Japan and USA re Korea issue, SCS, and island disputes. When Vietnam built islands (first ones to do so!), China responded in kind. Chinese islands are just better built. PLAAF airforce is indeed top tier with promising new developments and the base infrastructure and community to keep it up. But it is not in response to India. Taiwan by itself is FAR smaller and less well equipped than India. PLAAF is aiming at matching USAF. It's far surpassed the others including RuAF. Just look at numbers and trends. There's also no good reason to think all Chinese made equipment is worse than Indian or Russian ones. In fact there's actually more evidence pointing the other way.
Mid-Life upgrade? That's probably equivalent to 200 hundred years of service compared to the PLAAF and USAF. The Indian Air Force has a terrible maintenance record. The IAF 'Flying Coffins' are to be literally taken. You can put the J-20, Su-57, F22 and f35 in the hands of the Indian Air Force. Five years later, I will bet my right arm, that the terrible maintenance and lackadaisical attitude of the IAF will have some of those incredible jets falling out of the sky