The primary aim of the IAF is to diversify away from Russian platforms. The Mig 35 is probably the least favoured candidate for this contract. I personally would prefer a combination of the Gripen and the SH. That would probably make the most sense but there are always politics involved and Sweden is not a big hitter. Replacing the Mig 21's with a double engined aircraft alone would be stupid and prohibitively expensive.
BTW, forget the aircrafts that failed, I would like to know which one did not.
The primary aim that u are referring is correct.India wants western planes with superior technology(not wrt to russia but western standards) not only in 4th generation craft but also as a stepping stone for its MCA programme as a counterbalance to its reliance on russia for pak-fa, fgfa programme