The major themes of Indian art seem to begin emerging as early as the Harappan period, about 2500 BC. Although we're still not sure, some Harappan images look like later images of Vishnu and Shiva, and the tradition may start this early.
With the arrival of the Indo-Europeans (or Aryans) around 1500 BC, came new artistic ideas.
Around 500 BC, the conversion to Buddhism of a large part of the population of India brought with it some new artistic themes. But at first nobody made images of the Buddha - only stupas (STOO-pahs), symbolic representations that didn't look like a person.
Then the conquests of Alexander the Great, in the 320s BC, also had an important impact on Indian art. Alexander left colonies of Greek veteran soldiers in Afghanistan and Pakistan, and these soldiers attracted Greek sculptors (maybe some of the soldiers were sculptors). Their Greek-style carvings attracted attention in India - the first life-size stone statues in India date to the 200s BC, just after Alexander.
Finally, the arrival of the Islamic faith and Islamic conquerors about 1000 AD brought iconoclasm to India, and a love of varied and complex patterning derived from Arabic and Persian models. This affected even Hindu artists who had not converted to Islam. Small Persian-style miniature paintings also became popular.
To find out more about Indian art, check out these books from your local library or from Amazon
Eyewitness India, by Manini Chatterjee (2002). Written for kids. It's not specifically about Indian art, but you'll find information about Indian art in this book.
Ancient India, by Virginia Schomp (2005). Written for middle schoolers. Again, not specifically about Indian art, but very good for reports, and there is information about Indian art.
Indian Art (Oxford History of Art), by Partha Mitter (2001). Not especially for kids, but a good survey of Indian art for ordinary people, going from ancient India to modern India.
Indian Art, by Vidya Dehejia (1997). Also written for adults, but the author's the curator of Indian art at the Smithsonian Institution. She emphasizes the close relationship between Indian art and religion.