Here the Indian companies were on receiving side and not on giving side, hope you understood the context here.
Fast forward to 2000s, where this rule was no more and foreign companies were free to have their own businesses. So you saw TVS and Suzuki split, Kinetic and Honda split. And all these JVs were not doing well at that time and Hero and Honda's JV was doing exceptionally well. So why to break something that is already doing good. Honda taking the advantage setup its own HMSI. Kawasaki was particularly small entity compared to Honda and Suzuki and limited range of motorcycles to offer, they played safe by allowing Bajaj to be its salesman.
As you said, Hero was free to do anything that was out side the JV. But again, those products may not me Direct competition to Hero Honda JV or Honda's products. This is the point where many motorcycle enthusiasts and anti-hero were missing here. So what Hero did, they launched mopeds called Hero Puch and scooters like Winner, and Majestic. Some electric scooters too. These were not direct competition to Honda. And assuming that you were expecting a 250cc from Hero individually at that time, then you are wrong because there was no market for 250cc bikes at that time. Remember BMW Funduro? It is not just Hero, but even TVS and Bajaj were treated in similar way. You know that when Suzuki Fiero came there was not a single decal or mention of TVS on it?
So, Honda did setup HMSI and from here the differences arose which were brewing till the breakup. Starting with Unicorn & Activa. Ever Imagined why Hero never put up Monoshock? It is product differentiation between Hero's 150cc bikes and Honda's Unicorn. What Hero got in advantage is better tuned engines for more performance like Xtreme and Hunk.
Hero not bringing much to table? Hero was a cycle manufacturer and Honda was a giant in two-wheeler industry in world. Please understand that.
And getting a 250cc because Honda is vacating is a humorous statement!! When did Hero announce its 250cc bike and When did Honda announced it 300cc bikes? Check out the timeliness and you will understand.
Well typing is easy if you understand what you are typing, but if the scope is limited and do not know about it completely, it just becomes funny or ridiculous.


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and yeah, you have fell on your own pit.

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