My company is paying for my upgrade (EB3 to EB2/ India). They are asking me to sign a contract to work for at least 2 years after I get the permanent residency. Is this normal?

Yes... if they are paying for this... education or almost anything else like relocation... there are always strings attached. To make sure they get sufficient services for their expenditures before you could pack up and leave.

With a contract... they can make you reimburse them for everything they spent if you quit earlier. Without it you could leave three days after you started and they would never get a dime back.

They determined two years of you working for them justifies the money they would spend.