Yes India followed this line of thinking (support to Palestinian nationhood) during cold war era as well (and it continues to this day i.e 2 state solution).
But it didn't stop India from recognising Israel in 1950 (because I see Nehru in that picture too hehe).
What India did do was tailor this to its interests in cold war, as diplomatic relations was put on hold with Israel, as we see larger advantage to pursuing relations with Arab world and also USSR bloc (which was more pro-Palestine) for various reasons.
More context I posted elsewhere:
https://defencehub.live/threads/why-pakistan-will-be-next-to-normalize-with-israel.3526/#post-34169
But after cold war ended, India very quickly established official relations and work a lot to develop them with Israel.....there was little to no blowback from Arab world (w.r.t our workers in Gulf etc) as they simply recognised India is too large to mutually exclude on basis of its Israel relations (esp given arab countries at that point also were starting their own underground relations with Israel as palestine peace process moved forward).
India never abandoned support to Palestinian cause to establish their own state, Indonesia can simply do the same....and that is for Israel and Palestine to work out between themselves. you simply recognise both parties and conduct relations with both.
I feel Indonesia is also large enough to have done this policy back then (in 90s)...and definitely now its overdue to put this issue to rest now and get benefits of having an official relationship with Israel.
Actually I have read at extended depth more than my own normal (for matters that interest me) on Israel in nearly every realm.
For example, there was a good book on 1967 war that not only talked about the war itself but also the politics within Israel at the time shaping the young country and providing a huge debate inside it about where its headed and where to go.
People often assume Israel is a monolith "Jewish state"....but in that book it explored the huge process going on given it's democratic setup. There was a lot of details given on the intense debates between political leaders and factions of the time as to the demographic future of Israel (even just considering Jews)....as to the ashkenazi (european) jewish setup and majority...the increasing sephardic + mizrahim immigration to Israel (jews that often many times were forced out of the arab countries they had long called home) and the fears regarding this from the ashkenazi when the latter groups become inevitable majority. There was lot of concern about what their (mizrahi) vision is compared to ashkenazi vision for Israel etc.
This debate then continued w.r.t the arabs that now lived within Israel territory at the time, whether to and then how to incorporate them into the political process and setup of Israel.
Now it is interesting to contrast the downstream reality (Sephardic + Mizrahim are now long since the majority of Israel population compared to Ashkenazi "pioneers + elites" and Israeli Arabs...20% of population of Israel.... are integrated into the political process and have their parties and spokespeople and so on).
All these exist in every country, these issues, for various reasons and contexts. But how you approach dealing with it boldy and with trust and honesty....is what separates genuine democracy from authoritarian/totaitarian extremism...which so often the case is the more convenient pick, often ironically by the very govts that detest or criticize Israel the most.