Does Reset and "Erase All Content and Settings" removes iOS updates? I want to reset and clear the iPad. 

But I would like to keep the iOS updates.
No. Factory resetting your phone only deletes the user data; the operating system and firmware will still remain the same.

That means, if your iPhone is running iOS 9.3.2 before you reset with Erase all content and settings, it will be running iOS 9.3.2 (minus all of your data) once it starts up again.