IIndia’s Defense Acquisition Council has recently approved the purchase of 114 Rafale fighter aircraft from Dassault Aviation. The value of this deal is around Rs 3.25 lakh crore.
This follows French President Emmanuel Macron’s recent visit to India for the AI summit, where he committed to ‘technology transfer’ that could significantly enhance New Delhi’s defense capabilities.
However, this comes with a caveat, with reports suggesting that France has steadfastly refused to share critical source code that would hinder India’s autonomy in customizing software systems and integrating sensor and radar systems.
This will limit New Delhi’s efforts to indigenize the operations of the Indian Air Force squadron ‘Golden Arrows’. This may not be the only hurdle India faces in re-establishing itself in the defense hierarchy.
Assembly vs Autonomy
The Indian Air Force operates 29 fighter squadrons against an authorized strength of 42. MiG-21 fighter jets to be retired in September 2025 after 62 years. Pakistan has about 25 squadrons. China’s regions are around 65. Operation Vermillion in May 2025 exposed this vulnerability through the largest beyond-visual-range engagement in the history of the region.
This reality underlies the Rafale purchase. Of the 114 aircraft, 18 will be in fly-away condition. The remaining 96 will be manufactured in India, with indigenous content targeted at 30% initially and eventually 60%.
Tata Advanced Systems has signed an agreement with Dassault to manufacture four fuselage segments in Hyderabad, which will supply up to 24 fuselages annually from fiscal 2028.
The question is whether assembly means autonomy? In defense aerospace, geo-economic leverage is measurable.
These include the proportion of domestic value-add, control over mission software, freedom to integrate third-party weapons and autonomy over lifecycle upgrades, which now appear to be under threat. Depth of assembly without design authorization changes production geography but not bargaining power.
France has placed ‘Make in India’ at the center of the partnership. But technology transfer faces a serious hurdle. While Dassault will co-produce the airframe and Safran M88 engine, access to the source code for the electronic warfare and radar systems will remain restricted. This limits India’s ability to independently integrate indigenous weapons.
Software defines modern warfare. Without source code access each modification requires bilateral approval and outlay to foreign contractors.
India’s experience with the Mirage 2000 upgrade reflects this, where French vendor dependence has added more than €1 billion in integration costs across 50 aircraft since 2011. Türkiye’s TF-X KAAN program reflects the risks of partial transfer. Ankara has secured the airframe production rights but the engines are dependent on foreign suppliers.
Diversification as leverage
Russia has reportedly offered unprecedented access to the source code of the Su-57 fighter aircraft in consultation for co-production.
United Aircraft Corporation has generally indicated a willingness to provide greater source code access than Western partners, potentially enabling deeper avionics customization. It represents a strategic defense against Western technological gatekeeping, leveraging existing infrastructure from licensed Su-30MKI production.
However, a hedge is only credible if the supplier has the technical and industrial depth to support it. Russia’s aerospace industry operates under supply constraints induced by sanctions, and the Su-57’s engine program remains in transition from the AL-41F1 to the Izdeliye 30.
Whether “full source code access” extends to the mission systems architecture or only limited avionics layers is unclear. A defense that substitutes one dependency for another does not deepen autonomy.
India is close to a deal to export Su-30MKI fighter aircraft worth $3 billion to Armenia. The Armenian version will have indigenously developed AESA radar and Astra missiles. This marks India’s shift from a licensee to a modifier-exporter, indicating a new level of absorptive maturity.
India’s diversification into France, Russia, Israel and the United States prevents supplier monopoly and strengthens negotiating leverage.
Operation Vermillion validated India’s punitive airpower doctrine but exposed coordination complexities across the Rafale, Su-30MKI and Mirage 2000 platforms. This episode reinforced the importance of software integration.
This has intensified the emphasis on integrated air command and control systems and theater command.
Union Budget 2026-27 sees record Rs. Was allotted. Rs 7.85 lakh crore to Defense Ministry, an increase of over 15%. Capital outlay increased by over 20% to Rs 2.19 lakh crore. About 75% of the capital budget, Rs. Rs 1.39 lakh crore earmarked for domestic procurement to promote indigenous defense manufacturingSocial class.
This fiscal expansion is industrial policy by design. This mandate forces global original equipment manufacturers to set up not only assembly lines but also Tier 2 and Tier 3 supplier networks within India. Defense production reached Rs 1.51 lakh crore in the financial year 2024-25. The share of private sector increased to 23%.
Yet context matters. China’s defense expenditure is estimated at approximately $249 billion. India’s $93 billion budget requires an asymmetric strategy and qualitative superiority rather than numerical equality.
The resurgence of Donald Trump has increased volatility in transactions. The delay in engine delivery highlights how US industrial disruptions directly impact Indian sovereign capabilities. Thus, diversification of technology partners across France, Israel, and Russia is a geo-economic necessity.
path to strategic autonomy
The Indian Air Force achieved a TruVal rating of 69.4 in the World Directory of Modern Military Aircraft 2026 rankings, ranking it sixth globally. This is ahead of China’s rating of 63.8. This ranking reflects combat power and operational readiness. It does not measure industrial power or technological sovereignty.
As SIPRI notes, India is the world’s fifth-largest military spender with $86.1 billion in 2024 and remains the top arms importer while following import reduction policies.
The decisive metric is absorption capacity. Defense research and development gets Rs 29,100 crore in FY 2026-27. Without doubling the intensity of research, claims of co-evolution remain partial.
Tier 2 and Tier 3 suppliers face shortage of capital. In advanced aerospace ecosystems such as the United States and France, domestic value capture in combat aircraft programs exceeds 60%.
In India, indigenous value-addition in major licensed production platforms has historically been between 25-35%, concentrated in structural manufacturing rather than mission systems. Without deepening subsystem ownership, domestic content targets risk remaining assembly heavy.
Micro, small and medium enterprises lack depth of certification and access to advanced materials. Aerospace manufacturing requires long cycle capital and quality compliance infrastructure. Without deep-level ecosystem capabilities, India risks becoming a Tier 0 assembler.
The lack of talent is compounded by the lack of infrastructure. The demand for aerospace engineers is growing faster than the supply pipeline. Advanced manufacturing requires proficiency in artificial intelligence-driven design, digital twins, and simulation capabilities. Industrial sovereignty ultimately depends on the sovereignty of human capital.
The true geo-economic asset is not the airframe. This is a proprietary design architecture. Software defined warfare means that source codes determine autonomy.
Rafale integration dependency limits weapon customization. Su-57 talks potentially bypass Western gatekeepers. Indigenous platforms like Tejas MK2 and Advanced Medium Combat Aircraft have been accumulating intellectual property for decades.
India’s fighter jet moment is less about air dominance and more about industrial positioning. In the era of transactional geopolitics shaped by Trump’s return, strategic autonomy will not be measured by aircraft on the tarmac. This will be measured by who owns the code within them.
114 The Rafale programme, Su-57 consultancy, Armenia exports and Tejas development indicate structural ambition. The change depends on four conditions. First, to double the intensity of research and development to match global norms.
Second, build a deep-level aerospace supply chain with capital access and certification capability. Third, securing access to source code through strategic dialogue or indigenous development. Fourth, enhancing high-level technical human capital through formal training programs.
As far as the Rafale source code is concerned, if New Delhi remains dissatisfied with the API model offered by France, it may be time to reinvent the GaN model. ‘Self-reliant India’, Which could be the first statement, if not the first step, towards achieving defense autonomy.
The laboratory, not the runway, will determine whether India moves up the defense hierarchy or remains its most sophisticated customer in the medium to long term. The real question is whether India can reshape the global aerospace production geography, or continue to engage on others’ terms. Weapons are tools where industrial capacity is intended to be built around greater defence-technology transfer and embeddedness, which requires careful policy-nutrition and manoeuvring.
Dipanshu Mohan is Professor and Dean of OP Jindal Global University and Director of the Center for New Economics Studies (CNES).. Saksham Raj and Nagappan Arun contributed to this column and are both research analysts at the Center for New Economics Studies at OP Jindal Global University.
