Yes, this is something I’ve wanted to answer!

Well, okay, so the first thing that we must know is that for most of Indian history, (at least from around the Gupta period starting from 319 CE — the so-called “Golden Age of India”, the caste system was introduced in a much stricter form) majority of the population was forbidden from studying religious scripture, and the interpretation of those texts was left to the Brahmin caste (priests/scholars).

Now obviously you can see that once religious power rests in the hands of such a small minority it will be corrupted. Majority of India during the Middle Ages spoke Prakrit (which split into multiple Indo-Aryan languages), Sanskrit was reserved for the elite, the “pure”, the “Aryan”, that being the Brahmin.

These beliefs are not oral, they are written down.

Imagine living as a commoner in such a society. You’re probably a farmer or a labourer working on a farm. Then, there are the Brahmin, who are invited into large palaces, Emperors and local rulers pay them alms, request for their protection, they speak a completely alien language when chanting (Sanskrit), it’s like they’re talking to the Gods!

This over time had a profound effect on society. So, since people couldn’t read the Vedic scripture (or any religious scripture), there started to be an aura of mystery around those scriptures. There definitely was curiosity, but since they couldn’t read those scriptures, that curiosity turned into speculation, and over generations, this turned into complete historical revisionism.

For instance, many Indians believe the Vedas were composed since the beginning of time, obviously untrue, even the authors of the Vedas would deny such a claim. It was orally composed around 1400 BC, and written down around 3rd century BC when writing came to India. (The earliest manuscript we have, however, is from the 14th century, the older ones were likely lost).

Some believe the Vedas hold the knowledge of “science” and can only be interpreted through years of learning and mastering Sanskrit. (Once again the idea that Sanskrit is somehow a “superior” language is invoked here).

While it is true that the Sanskrit of the Vedas is pretty old, but thankfully Panini did all the work to standardize Sanskrit. So, we have the language bit cleared. And the Vedic hymns themselves? Well, rather than saying they contain science, I’d say they are a poetic form of writing history. Exaggerating the events of those times, and invoking all sorts of imagery involving the Gods from above descending down to fight, trying to glorify the battles of ancient India. Lots of details in the current edition of the Veda have been lost, but the outline survives. The Rig Veda is the prime example of this. It beckons to the thunder God Indra who comes down from heaven to destroy the enemy of the Aryans. The enemy tribes are killed in the thousands with Indra’s rage.

There can be so many interpretations of Indra. Maybe Indra refers to the storms and rains that might have killed warring tribes of the Indo-Aryans, and that could’ve been personified in later years as a strong man with a beard riding a chariot?

The same is true for the epics of Ramayana and Mahabharata, they are likely an exaggerated account of battles that took place in Ancient India, or maybe they are works of fiction, written to be read and enjoyed. We don’t know. They try to explain the geography of India in mythical ways. Explaining that the island bridge between India and Sri Lanka is built by the army of Lord Ram during his invasion of Lanka. Obviously there wasn’t a literal army there! Just human imagination. Maybe there was an invasion of Lanka by an Indian force (there have been multiple in recent history, take the Chola Empire, for example) and that was glorified in the epics. We wouldn’t know though and it’s best we don’t try to claim them as historical fact.

But for the extremely religious, they assume the literal meaning. That Indra had a flying chariot that came down from heaven up from the sky, That the King of Lanka (Ravana) flew on a Vimana which was a Flying Fortress. Therefore, Ancient India had planes. Or when the Brahmastra (Brahma — universe, Astra — weapon, lit. “Weapon of the Universe”) was used by Bhishma, it was described as a weapon of mass destruction that rendered the Earth barren, and completely annihilated it’s target. It’s used was restricted and only invoked by the Gods to uphold Dharma. Therefore, Ancient India had nukes!

It doesn’t help either that most Indians are not taught their ancient history. For the majority of my high school history, I learnt about the Ghaznavids, the Delhi Sultans, the Rajputs, the Mughals, the Marathas, the French Revolution, the British Raj, the industrial revolution in Britain, WW1, communism in the Soviet Union, Nazism/WW2, and then Gandhi and the freedom movement. All of these occur after 1000 AD. We did not learn about Ancient India in depth. Maybe a chapter on Indus Valley, Mauryan Empire and Buddhism in middle school. It could be argued that Indian history is so vast that you would have to sacrifice on detail to go through each and every period of India, and that the history textbooks stick to the most recent ones. But I digress.

So you’ve a combination of these things playing together, people are ignorant of their history and at the same time have mentally exaggerated the ideas that were produced in Ancient Indian works.

And then we have the New Age Movement coming up with all sorts of nonsense regarding “yoga”, “tantrics”, “chakras” etc., this only fuels that belief.

And it doesn’t help that there are conspiracy theory types who have gained exposure, who believe the Taj Mahal was a Shiva Temple before Shah Jahan destroyed it. I’m all for taking a critical look at Mughal Empire and other Islamic empires in regards to their treatment of non-Muslims and destruction of many universities and libraries of medieval India, but only when presented with verifiable facts.

There was an AMA with someone researching pseudo-archeology that might be of interest to you. They mentioned that there's a lot of this sort of claim centered around different cultures.

Edit: Pinging /u/DSAArchaeology in case he has any insight on this claim.