You have answered part of the question yourself. It is definitely a plot to sell more music via apps.
The other consideration I feel is the fact that FM radio is still very short of its coverage. Meaning that not all areas are covered by FM radio broadcast, and in developed nations the internet based music broadcast is so evolved that FM is not the favourite anymore it seems. Add to that the emergence of Internet based Radio programs or podcasts. So one hardly needs FM in such situations.
While a cell phone should be capable of FM reception, it is not an essential component, and perhaps it is just a decision based on how much the device will be used for that specific task.
Further, for people who are using Google handsets, if they really want to listen to FM, I am sure they can afford a small FM receiver which is dedicated for it. Cell phones can be used for more important tasks could be there logic. Since the market for these cell phones in not just India, but the whole world, and in any kind of product development the developed countries and their considerations comes first.