I must start by problematizing some of your premises. First, Hinduism is not unique in this sense. Buddhism and Jainism, two other Vedic religions (which have as much of a claim to the Vedic heritage as Hinduism does, historically speaking). Moreover, there are Zoroastrians still today - mostly in India, but also in Iran, although it is a rapidly shrinking group.

Moreover, we need to consider what actually constituted "Indo-European paganism". Perhaps the most key feature of Indo-European religion is worship centered on a patriarchal deity of the daylit sky, "Father Sky", the antecedent to Zeus and many other deities, directly or indirectly. On the basis of geography and material exchange, it is plausible enough that there is a direct connection between Indo-European religion and east asian practices, such as the "Tengrism" of the Mongols, and the worship of Tian, heaven, in traditional Chinese worship (there are various other correspondences, such as the characteristics attributed to yin-yang as heaven-earth, although any proposed connection would be very speculative).

So if you consider adding the Buddhist sphere and the Sinosphere into the picture of such "pagan" practices, suddenly India doesn't look as isolated anymore, and instead I think the question should be phrased in terms of why Christianity outcompeted other belief systems in Europe, why Islam displaced Zoroastrianism and Manichaeism, and so forth. The sometimes aggressive proselytizing and empire-building of both of these Abrahamitic faiths is obviously a major component of this and we can see other contingencies (e.g., the legacy of Greek rhetoric and intellectual life in Christianity) as having plausibly been key to their success.

So, the primary reason for why Hinduism continued to exist must be something along the lines of, "because it wasn't outcompeted by Islam everywhere". If we compare to Persia, the Arab invaders occupied and took over what was a crumbling Sasanian state - dysfunctional, but with many institutional features that could be easily taken over. The Abbasid revolution led to a Persianization of the Caliphate and reforms that made it appealing for Zoroastrians to convert, as much of the military elite had done earlier.

The early Arabic incursions into India (beyond the Indus river) were not so straightforward and they were a slog of successes and defeats. Only over the centuries did states like the emerging Delhi Sultanate and eventually Mughal Empire manage to get control over much of the subcontinent. By that time, there were tried and tested methods of Islamic governance and jurisprudence for incorporating religious minorities into the administration of the state, especially where pre-existing hierarchies existed, as in India.

We can see the legacy of this today pretty clearly by looking at the distribution of Islam in India. In the northwestern parts that were conquered early in the Caliphate's history (today's Pakistan) Islam is overwhelmingly dominant; except for Bangladesh, it is a minority religion everywhere else in the Indian subcontinent.