Yeah, I think anweRU said it best. You can't destroy a faction until all of the regions that faction holds in its home theatre are taken. So, for Spain, you have to take Spain, but also Gibraltar, Naples, Flanders, Sardinia, and Milan.

If that's not how it works in India, what you may be seeing is a revolution triggered by the populace's lack of loyalty and deep dissatisfaction with losing even a little territory. I tend to see a lot more rebel provinces show up in India, even while the original versions of Marathas and the Mughal are still around. Losing your traditional capital region (like France, Spain, or Englad) probably causes a significantly higher amount of dissatisfaction in your people than were you to lose an associated region like Sardinia, Alsace, or Ireland.