A few responses: 1) India is unique on Earth in that the whole country is structured around endogamous mating groups so there's varying levels of trust within those groups but almost none overall 2) India is a bit more populous than Iceland - Iceland is under the pop threshold.
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Meritocracy is one of the cancers that breaks down the needed social structures. You hire the highest test score for a hiring manager job because your principle is "higher the highest scorer" but that scorer happens to have "hire my coethnic" as his motivating principle. 1/2
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In a single group your test might filter that out because people with those values score lowly on tests. When you have a multi-ethnic society implicit assumptions about those correlations no longer hold and in fact break the system if there are any group exceptions 2/2
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and if it can blow up due to misperceptions then it inevitably *will* blow up by the central limit theorem. Some event will blow the enterprise up. Depending on the time line for whatever goal you have in mind it becomes increasingly improbable that it ever can be accomplished.
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This is getting into a whole different area. Affirmative action exists for lots of complex reasons including that the state religion regards it as holy because of who it harms and who it helps. The state religion doesn't have elevation of redheads as a tenet.
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