Why union territories are not a state? what is the need of having union territories?

Some areas and regions were declared as the Union Territories because of various reasons.

Some of these are:

• Some areas were too small to be made into a state as per the provision of the Constitution. During the discussion on reorganisation of states in 1956, the States Reorganisation Commission recommended creation of a different category for these territories since they neither fit the model of a state, nor do they follow a uniform pattern when it comes to governance.
• Small population and land size: Some areas had very small population and hence running legislative assembly and a council of ministers for them would have been additional burden to exchequer.
• Strategic locations: Lakshdweep and Andaman and Nicobar islands are quite far from mainland. Further, they have strategic importance. Thus, they were declared as Union Territories and were placed under the control of the Union Government.
• Administrative importance: Some regions are of administrative importance. Delhi and Chandigarh are two union territories which are important as administrative capital of India and administrative capital of Haryana and Punjab. So, control of these union territories are important for Indian government.