Agreed, 400-500 would be too much, right now atleast. This is not Mig-21... LCA/MWF leans heavily on QualityoverQuality while being reasonably priced being mid-tier jets.
The targeted 123 LCA & 200 MWF is a decent plan. Maybe a squadron or 2, more Mark1A to keep assembly lines hot till 2027-28. Enough.