I think part of the problem is exactly this. We don't say Spain should be embarrassed at the Muslim conquest, yet we're expected to say India should be 'ashamed' (for what?) for their past two centuries? History just is... We should stop assigning emotional value to it.
The issue here is twofold. Firstly, India is not unique in this pursuit. China also has taken charge of constructing its own history, and sometimes it's at odds with Western thinking. Often time, the oral / traditional accounts are found to be true.
Secondly, the West also falls into magical thinking. For example, right here, you are parroting the idea that Indian heterodoxy over their own history is misguided. However, it has a clear historical basis in the fact that Britain tried to expropriate most of its history. I don't mean taking various artifacts.
I mean that, for many years, Western historians pushed the idea that the Indus Valley Civilization inhabitants were not related to modern Indians. They couldn't deal with the fact that Indians may have had one of the oldest, largest, and richest ancient civilizations. Of course history has proved them wrong.... Harappan genes are well represented in the Indian subcontinent.
So, sure, we can make all kinds of claims about Indian historians inflating their own history (I would agree), but to then say that Western historians don't is just wrong... Remember, Nazi Germany's racial policy is the direct result of a ridiculously flawed and fantastical understanding of Indian history by Western historians. Like it or not, the Nazis were western too (and besides, plenty of non-German historians agreed with them... we just like to forget about that).
Finally, we cannot ignore the impact of Nazism here. Even today, it is difficult to talk about Aryans without conjuring up images of genocidal Germans. Research has to be qualified and disclaimed so that people don't take the objective historical record and try to justify more atrocities.
For example, going back to the IVC. European historians were insistent that the Aryans civilized India, and many insisted that the IVC was Aryan, and not really 'Indian'. Again, the evidence is very clear that the Harappans have no steppe ancestry. But again, we have an example of the very sort of behavior you accuse india of, except by British historians.