Sarfraz non selection was due to him being branded as having issues against pace. I have seen couple of Ranji matches where he has played. He certainly look hurried against good pace. He doesn't look very bad but doesn't look very good either. He has not been tested well. Lets see. His reputation in Mumbai is very similar to that of Iyer. Very good against Spin, and average against pace. That is what was holding him back. That and Rahul Dravid's preference to KL.
Taking a step back, my overall point was that most of India's test selections are based on First class performances. It just so happens that many of these FC successes are also IPL successes. Moreover if the successful FC players are able to face international players in high pressure situations in IPL and succeed shouldn't that be one of the reasons for their selection? If there are two good FC players with similar success in FC and one of them has faced international bowlers in IPL and succeeded, then it is a point in their favor. Not sure why a selector would ignore it.
Even in the current team, much maligned Mukesh Kumar and Akash Deep have excellent FC records. So their selection cannot be doubted. and both have had bang average IPL but still made it into Indian team. IPL played no role in their selection. In the current team there are many who are not IPL stalwarts like Mukesh, Aaksh, Siraj (he had one good IPL season, otherwise bang average), Jurel, Sarfarz. Even Gill when he made is test debut, he was bang average IPL player.
So IPL does play a role, as it should, but majority of the players also have very good FC records before they make it into Indian Test team.