Imagine what the Cold War would be like if instead of Canada and Mexico the U.S. had the Soviet Union to the north and the People's Republic of China to the south. That is the geopolitical reality of the Indian subcontinent. Sharing India's Western border is Pakistan - plenty of bad blood flows between the two nations after a tumultuous separation of the two in 1947 and a number of wars since, the most recent armed conflict occurring just 15 years ago. If Pakistan is India's Soviet Union, then there's no question who would be their China - quite simply and literally, it's China. Sharing India's Eastern border, the PRC is a major strategic competitor to India by geographical default and control of the Indian Ocean and the South-East Pacific by one nation puts the other in a submissive bind (as well as many other nations, including Singapore, Taiwan, Vietnam, the Philippines, Indonesia and Japan). This has made Pakistan and China natural allies-of-convenience, and whatever chunk of Pakistan's war machine that isn't directly supplied by the U.S. is directly supplied by the PRC - constituting a very, very large chunk. With the PRC fielding stealth prototype and pre-production fighters, and a high likelihood of Pakistan benefiting with at least improved 4/4+ Generation fighters, it's a foregone conclusion that India would attempt development of stealth fighters of their own. But they can't wait for the years if not decades of development needed to counter their adversaries' efforts, not with China's examples already airborne and just waiting for full production. The Indians are going for a three-tier approach: acquire/co-develop what they can get from the West, acquire/co-develop what they can get from Russia, and in the meantime their own aerospace engineers can keep busy on a true and fully-indigenous Indian stealth fighter.
Above image credit "Johnxxx9" via Wikipedia, used through Creative Commons
Indian Stealth Pre-History
During WWII, the air forces defending India were officially a part of the Royal Air Force, and continued to be so until full independence in 1947. As such the Indian Air Force initially fielded the British aircraft types immediately available, and continued ordering and operating British aircraft up to the present day. For good measure, a few other nations helped source aircraft for the IAF, but the inventory was predominantly British in the formulative years.
The Folland company of Britain developed an aircraft called the "Gnat" based on the idea of a super-lightweight, cheap fighter. The RAF never bought on the idea, but adopted the Gnat as its standard high-performance trainer and the mount of the Red Arrows aerobatic team. The Indians, however, did utilize it as a front-line fighter (produced by Hindustan Aircraft LTD as the Ajeet) and scored a number of aerial victories in the type against the Pakistani Air Force. Image from Bharat Rakshak
By the 60s, the Indians were already engaged in armed conflict with both China and Pakistan. Furthermore, the Indians started to develop closer diplomatic relations with the Soviet Union, although ties with the West weren't exactly chilled. The Indian Air Force was in the unique position of operating both Western and Soviet types simultaneously, against the Western and Soviet-derived designs fielded by Pakistan and China. At the same time, the Indians invited Kurt Tank, who had developed many designs for the Nazi war machine during WWII (including the highly successful Fw-190 "Butcher-Bird"), to develop high-performance and supersonic designs for Indian production. This resulted in the unfortunately underpowered HF-24 Marut that made little tactical contribution but nonetheless was an extremely important component in Indian aerospace development.
An HF-24 Marut at the Deutsches Museum Flugwerft Schliessheim. Image credit "Softeis" via Wikipedia, used through Creative Commons
This Time, India Outsources from the West (and East)
With access to high-performance tactical aircraft from both the West and Soviet bloc, the Indian Air Force remained very well-equipped throughout the Cold War and beyond. Local aerospace industry became highly adept at mixing and matching the best, especially when it came to electronics, and pumped out highly upgraded versions of classic designs such as the MiG-21 "Bison" (said to have an electronics suite so advanced it can give serious trouble to 4+ Generation fighters). Today, the Indian Air Force resembles the Farnborough Air Show for being a showcase of the hottest hardware global aerospace firms offer, including top-model Sukhoi Flankers and MiG Fulcrums, Dassault Rafales, and a diverse fleet of helicopters including the gargantuan Mi-26 alongside the more familiar Chinook and Mi-35s operating with AH-64 Apaches.
Image credit "g4sp" via Wikipedia, used under Creative Commons
The Su-30MKI (for what roughly translates to "Modernized [K]ommercial for India") is one of the most advanced variants of the "Flanker" and consequently one of the most advanced 4+ Gen fighters on the planet. It actually has more in common with the Su-35 advanced development of the Flanker than the original Su-27 model. Although it doesn't look like it, it more than likely at least has some sort of radar cross-section reduction technology applied to it such as strategically-applied radar-absorbent coating and it's probably a reasonable estimate that its RCS is similar to the F/A-18F Super Hornet as a worst case scenario. The Su-30MKI also more than likely has powerful jammers to further stymie enemy detection efforts, and these planes will soon be upgraded with AESA radar that itself can also act as a jammer.
Image credit Joey Quain via Flickr, used under Creative Commons
To replace parts of its more antiquated force structure, including the MiG-21s, the Indians launched a program called "Medium Multi-Role Combat Aircraft" and in turn selected the French-made Rafale to fulfill that role (from a competition that included the Eurofighter, F-16, F/A-18E Super Hornet and Su-35 Super Flanker). Although not a total stealth aircraft, the Rafale nonetheless incorporates a slew of radar cross-section reduction technology and when paired with stealth weapons can evade enemy detection. The examples to be fielded by the IAF and manufactured by Hindustan Aircraft Ltd will likely incorporate additional enhancements such as locally-made jammers and true AESA radar.
Image credit "Nockson" via Wikipedia, used under Creative Commons
Neither of these is a true 5th Gen stealth fighter, so that's where the Fifth-Generation Fighter Aircraft (FGFA) program comes in. A joint program with Russia, the ultimate goal for India is towards a locally-optimized variant of the production version of the T-50 5th Gen fighter prototype. However, there has been a buzz or reports stating that the Indians are extremely unhappy with how the T-50 program is so-far developing, including differences in ideas of technology and work/production sharing.
A possible configuration of a production version of the T-50 derived FGFA for India. Image from Defense Update
The Rising Indian Aerospace Industry
Fortunately for the Indians, they have a few backup options. Namely, they've been working on a few truly indigenous programs with, as far as airframe production is concerned, total independence from other nations.
An early pre-production model of the HAL Tejas, image credit Aeroprints via Wikipedia. Used under Creative Commons
The Tejas is a very lightweight, very small 4th Gen class fighter currently being fielded by the IAF and is the first truly indigenous fighter design since the Marut. Like contemporary designs, it will likely incorporate stealth/radar cross-section reduction techniques - but if nothing else, it will return a smaller radar echo simply by being smaller in the first place. Tiny even in comparison to the F-16, the Tejas is perhaps the smallest frontline supersonic tactical aircraft currently in production and echoes the design ethic of the original Folland Gnat/HAL Ajeet that India had success with. It will come in single-seat fighter, two-seat trainer/fighter and even carrier-launched versions, to equip a new class of medium-sized aircraft carrier that will be the centerpiece of the Indian Navy.
A model of a possible configuration of a production AMCA-derived fighter. Compare to the aerodynamic test article depicted in the topshot. Image credit Defense Radar.
For a true 5th Gen stealth fighter, the Advanced Medium Combat Aircraft (AMCA) will produce a truly indigenous platform that will likely, at least, be in the same stealth class as the F-35 or T-50 and likely be in the same size class as the Super Hornet (given the most common twin-engine configurations seen). Little information is available on this project at the moment, as little information has been developed for it, period. A prototype is at least a few years away still, and it's possible this isn't even the "frozen" design configuration yet. It's also possible the Indians may decide which of the T-50/FGFA and AMCA baskets to throw their eggs into - the T-50-based option would at least seem the most immediately tempting, as several flying prototypes have already been demonstrated and thus provides a more proven and immediate solution provided a model can be tailored to the IAF's satisfaction.
In either case, stealth fighters serving with the IAF seems as inevitable as it does for the Russian air force, the People's Liberation Army-Air Force and the USAF. India is surrounded by potential adversaries, and with growing domestic industry and a population capable of rivaling China's, it almost seems a foregone conclusion that a military showdown is inevitable. Hopefully it will be a relatively peaceful showdown just as it was for the U.S. and the Soviet Union - but if defense really is the best policy towards peace, then stealth fighters will certainly help the IAF achieve that objective.