If I understand it correctly, there's still a fixed overhead cost to steel. So, the larger the ship, the more steel you're using. Yes, with the MILGEM-J we
can lower the build (from naval to commercial), but the cost might still be on the higher side compared to a smaller ship, like an enlarged FAC(M). If anything, if we needed a corvette similar to the 056 (as
@Rafi alluded to), then a cost-reduced MILGEM-J/ADA is the way to go.
However, with LMVs, the vision is a little different. I'd want to produce ships that cost less than even the 056, which means either enlarging the FAC(M)/Azmat, or looking at one of the concepts above. In fact, I think a bigger FAC(M) or Azmat would basically result in a C74/7310-like design.
The benefit of an LMV is that we'd manufacture these small ships for like $50-60 m each, but each one of them can offer the anti-ship/land-attack and anti-sub effect of a MILGEM-J. It would lack the range, endurance, ECM, etc, but it would stick nearer to our coasts, and work under an actual MILGEM-J (or 054A/P).
If you have 12 of these ships, you're presenting the IN with 12 possible land-attack threats, 12 possible anti-ship threats (be it via the subsonic Harbah or supersonic missile), and more ASW coverage. Coupled with our growing submarine force, LRMPAs, coastal AShM, JF-17s, etc, would the IN even want to fight over our SLOC/EEZ? At the minimum, we might be able to stabilize the naval front (i.e., achieve true deterrence).
This aside, if I wanted more frigates, I'd add more MILGEM-Js. If I wanted more OPVs (e.g., for policing our SLOC, coalition missions, etc), I'd build slimmed-down MILGEM-J/ADAs. No doubt on any of that.