three different one word answers, COST, the Arjun costs more than an M1A2. DOCTRINE, Indian Army doctrine is built around a T rank doctrine. This involves over concentration of force (for MBTs) and a on the cheap training model. With an MBT you need very technical well trained and drilled crews who can operate agaisnt numerically superior foes and win. This is another added cost the Indian army has to absorb. STUPIDITY, certain indian officers and politicians think the next war will be like the last, this is called the victors disease and is very common. What they had wonthe last war so it should win the next war, a logial fallacy.
For these three reasons the Indian Army has held off on mass induction, these reason however do not subtract form the Arjuns battlefeild viablity. The altest feild tests showed the various components were finally working in sync.
I am guesisng the AK II will be a ZTZ 99 copy, a vast improvement over the AK but still handicapped by a autoloading 125mm L/48 gun firing a 560mm long penetrator. If Pakistan wanted a real MBT they would use either the Type 98G- it uses a Norinco 120mm smoothbore capable of firing NATO ammuntion. or licence build M1A1 or A2 Abrams.
But both these tanks would require the same shift in policy and doctrine and increased cost the Indian army is facing.
of course the best solution is for both Pakistan and India ot sit down and resolve your differance like peaceable people, stop bombing each other and re-direct all that easted treasure into the economy, health care and educational systems of your nations.