Hip and bust size is primarily determined by fat deposits, less money, means less food, means less sugar to be stored means less fat. The penis, does contain fats but not to the same extent. So there'd be a difference though not one so noticeable as with womens' hips or breasts.
Also, according to the few reports I've read, those whose ancestors grew up in warmer climates tended to have larger penises when flaccid, although averages are similar for erections. So this suggests that Indian penises should in fact appear larger than Caucasian ones, not smaller.
My opinions are that the condoms are proper sized, the men just don't use them properly. I am by no means informed enough to make these statements with certainty though human error (I almost wrote hymen error) is generally a safe assumption.