How do you know it won't work other way around?
Because history has proven over a dozen times that a centrally managed/controlled economy never works. In your example you can replace MS with any eastern European country, the USSR, or a dozen other failed communist states that tried to control their economy and have it successfully compete with capitalism. That is doomed to fail.
Is it not obvious that such OEMs would never view it as their goal to sell WP devices? Their actual goal would be to exert the least amount of effort possible while still being able to cash MS' (in case of communism the government's) check! That is what any such effort would be about.
Given that these same OEMs would simultaneously be competing tooth&nail with each other over a larger chunk of the Android pie, people just won't be stupid enough to not notice where those companies are truly invested.
This not theoretical. The WP ecosystem already perfectly demonstrates this, or why do you think HTC and Samsung don't do very well in the WP space? You're asking/hoping for that same ineffective model to be effective in an even more competitive Android space. It's a pipedream. As long as there are alternatives, the markets will reject those devices in the same way HTC and Samsung devices are largely ignored.
Governments couldn't do it. Neither can corporations. Neither can MS. It always fails. It never works. It's just not possible to force companies to effectively compete and innovate over scraps that are not worth competing over.
The only reason some Indian brands are trying WP is because MS is allowing them to slap a case and their branding on a reference hardware design, with a free OS, and also promising freedom from IP licensing costs. If those OEMs had to design the phone themselves none of them would be releasing WP devices. That won't win against Android where devices are designed and built to compete and stand out.
Economics 101. Demand must come first. Only then will a competitive and viable supply chain follow.