We believe (don't you?) that such an eventuality will not arise in the India-Pakistan scenario. Pak simply does not have the conventional might to threaten the existence of India as a nation, or to decimate a large portion of its army, let alone in its entirety. Or to kill millions of people. Or to burn several of our cities far away from Pakistan. Not with conventional weapons or war. The disparity in military might is just too big, as is the geographic reality that India is a sprawling, big country whereas Pakistan is a long line along India's border.
Frankly, no country barring the USA has the conventional might to threaten the existence of India or bring about that much death and destruction as you described. No, not even China, because of geographic factors. (The sentinel himalayas.)
So if USA declares war on India, NFU will be the first casualty. But barring that, India does not need to go nuclear, since its existence cannot be threatened by Pakistan or anybody else. But one can't say the same about Pakistan - in a protracted conventional war, India has the size, might, depth and reserves to threaten the very existence of Pak. Which is why Pak cannot afford a NFU policy, but India can.