Given that the main historical accounts of Alexander's expedition all mention and describe elephants it seems very odd to assume that a description of them would get garbled into a description of dragons. This is actually a pretty good example of the dangers of this sort of Euhemerism (Euhemerus was a Greek philosopher who posited that Zeus was actually an ancient King of Crete), which often ignores the broader context of a given passage and doesn't actually produce anything of value or interest aside from the satisfaction of "cracking the code". A more productive use of that passage (which, as I gather, is an offhand comment from Aelian writing some five hundred years after the fact in a work that was but about Alexander) is to understand it not as an isolated, easily quotable nugget but as a part of a larger work, and as a part of a larger discourse, in this case, discourse about India, a land of impossible riches in the Roman eye and, as important, marvels of all sort. The description of dragons, or gold digging ants, or men without necks, should be considered as like a literary device creating an evocative portrait of a land beyond imagination (which he might have believed, of course, we don't have the opportunity to ask).

Parker's Making of Roman India is a great example of how to use these sorts of descriptions to understand the society producing then rather than as bits of code to be cracked.