pip install --no-index can't find setuptools

For building packages pip uses build Isolation. I.e. it installs build dependencies into a separate virtual environment, build a package and remove the isolating venv. You don't have a wheel for setuptools to install into that transient environment so build fails.

On a connected host download setuptools and wheel using pip download setuptools wheel, copy downloaded wheels to the offline host and run

pip install --find-links /path/to/wheels/ --no-index mypackage

Or install everything avoiding transient isolating environment:

pip install --no-index --no-build-isolation mypackage