The problem here is that one word describes two completely different scenarios. In the USA, New Zealand and Australia the population shifted rather quickly into a majority of European descent.
Where this did not happen, in Africa, Asia or India, the colonies never got past the point of supplying raw-materials to their colonial power. Thats what I meant by "colonialism is so 1800s", the British empire of 1900 may have controlled lots of land and resources, but it did not control enough of the type of land that could be settled by Europeans to rival the US.
Too late in history to exterminate the locals, and educating them while retaining control would be a slow, risky and tedious process, at least in the first decades.
A richer India with a literate middle class would most likely want a greater degree of autonomy, perhaps even independence, and then there is not BE anymore.
"No more empty lands" means that the alternate superpower would need a on a global scale a large, educated population and lots of room and resources already in 1900, and IMO only Germany and perhaps, if we stretch it, Russia could do this.
India didn't just ship raw materials to its colonial power. It developed pretty well under Britain.
And whether the inhabitants are of European descent or not is irrelevant; blacks and asians are just as capable once their culture is modernised.
You misunderstand the way the British empire worked. Its money didn't come from ruling India and taxing it, stealing all its resources, etc... it came from trade.
A independant, liberal democratic India with a still strong Britain would make for a STRONGER Britain than one that is still having to keep control of India. They get all the benefits of doing buisness in India with none of the drawbacks of having to put so much into defence and everything.
In AH in general too much focus is based on maps. Maps mean very litlte. More land != more power. The British empire drew far, far more strength from the non-pink South America than from Africa.
The best way for Britain to have gone imo would be a tighter commonwealth; as it was iotl the commonwealth was too...British by design. In that it relied too much on conventions, respect, friendship, etc... It should have had a more formal constitution tied into it. This would keep links more secure even given a bit of a disaster.