That would have been way beyond our means. The sheer number of migs that needed replacement and the exorbitant cost of mirages would have rendered that impossible. (We were flying some 400+ mig-21s that needed to be replaced, not to mention mig-23s and mig-27s.) Getting that many mirage-2000-5s would be beyond France's means, let alone India's. We needed a cheap, light fighter to replace the mig-21s, and that is why we kept going with Tejas. That requirement has not gone away even today, even though we have MKIs and (soon) Rafales. We still need a cheap, light, low footprint fighter to maintain the requisite number of squadrons. Tejas is absolutely critical for the IAF's plans.
When we first acquired mirages in the 80s (as a panic response to Pakistan getting F-16s), the IAF was so enamored with it that they wanted to go for a follow on purchase. But the cost was so high that we had to go for the much cheaper mig-29s. Hence we ended up fielding two medium weight fighters. If another 60 mirages was considered too expensive, you can understand that replacing all migs with mirages would have been impossible. And paying for the ToT and manufacturing rights and assembly line also, would have been unthinkable.
Even today, simply upgrading the mirages for another 15 years is costing more than purchasing a brand new mig-29K or as much as two JF-17s or Tejas. That is how expensive French stuff is, not just for buying, but later for all spares and upgrades. No, we had to go for an indigenous alternative, so that all that money would be spent within the country.
Also, note that the IAF simply cannot afford to be an al heavy-medium force, like the USAF. We will have to have at least a third of our fleet in the light category, for affordability. Not just affordability of purchase, but also that of maintenance and operationl costs.
Yes, the Tejas program has been tortuously slow, but it was (is) inevitable. We will eventually see 200+ of those in service, in Mk2 and later blocks. Such a large country like India cannot be defended by 126 gold plated Rafales alone, or similarly uber expensive mirages. We need numbers, and therefore we need a cheap, and home made alternative. Hence Tejas.