India would not do this. According to The Blood Telegram by Gary Bass (essential reading on 1971 Indo-Pak War IMO) the reason India hesitated to do any real action against W Pakistan was because it would ruin their already tenuous reputation. India wanted to portray the war as an humanitarian intervention (it sort of was, but most countries didn't buy it), annexing Kashmir makes it seem like the war was an attempt to make Pakistan an impotent vassal. Nixon would see the annexation of Kashmir as illegal, cut off aid and ask Congress for sanctions (he considered doing this IOTL).