Yes, it is Orange and Yes, it was an option at the time. 1905-1907 Indians were available in the standard Royal Indian Blue, Black and Bright Vermillion. Right around 1909 is when Red became the standard.
source/image: Motorcyclepedia Museum
This is a 1906 Indian in Vermillion Orange. Restoration was completed by Bruce Linsday whom has being working with Ted on restorations since 1999.
Ted and Bruce have been working closely since the late 60’s when choppers were their priority.
Bruce has a vast collection of literature on vintage motorcycles including the original sales brochure that states Bright Vermillion was a factory option for Indians. 1906, 1907 & 1908 Indians were also available in the Standard Royal Blue and Black.