This isn't exactly a bug, but more of a gameplay issue. If you create Mughalistan, the color you get is a pale pink - which is barely distinguishable from England's pink. A selected Mughalistan province is almost exactly the color of an unselected English province. Given that England is the most likely country for the newborn Mughals to share borders with, this seems like a bad idea. I'd suggest blue, which I don't think is used by any countries in the area.
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