Many companies treat IP ownership as something settled after a contract is won. However, a buyer large enough to set the terms can make ownership a condition of bidding. When that happens, the licence you signed five years ago quietly decides which contracts you are allowed to compete for.
India’s Ministry of Defence has put out for consultation a draft acquisition procedure that does exactly this. Writing for ETGovernment, Major General Rajan Kochhar (Retd) reads the shift as doctrinal rather than procedural. The question moves from where equipment is manufactured to who owns the technology, and procurement preferences increasingly favour bidders holding indigenous IP and design authority. Reporting on the draft indicates that to qualify as indigenously designed, a vendor must own not just the finished system but the underlying source code and design data, together with the right to modify and upgrade without encumbrance. Design licences from foreign manufacturers do not satisfy that test.
Kochhar is careful that this is a proposal, and that its worth will turn on enforcement rather than drafting. The direction is the point.
IP ownership as a gate to putting in a bid
Ownership has moved upstream. It used to be a term you negotiated after selection. Increasingly it is a gate you pass before you are allowed to bid at all. Three consequences follow, and none of them are specific to defence.
– Read your inbound licences as market-access documents, not cost items. Field-of-use limits, consent-to-modify clauses and third-party transfer restrictions decide which customers you can serve, the same point I made about downloadable models in When Everyone Can Run the Model: What Open-Weight AI Means for Your IP Strategy.
– Treat design authority as an evidentiary claim. Ask what you could actually prove under scrutiny: chain of title, assignments from contractors and subcontractors, records of who wrote the code. Most companies find this out during a tender, which is the worst moment to find it out.
– Settle ownership in the agreement, before the work starts. Ownership rests on what the contract says rather than on who runs the factory, which is the mechanism underneath Why Costco’s $90B “Kirkland” Empire Is Really an IP Strategy in Disguise.
Leverage runs one way here. It moves to the licensor the moment your capital is committed, which is why an in-licence has to be priced before the plant is built, not after – the trap in Capacity Is Not a Moat: What India’s Electrification Build-Out Means for Your IP Strategy. There is an export dimension too. Buyers hesitate to take a system whose upgrade authority sits in a third country, because the seller cannot promise support without someone else’s permission. Ownership is not only a margin question. It is permission to sell.
So the useful question is not whether you own your IP. It is narrower and harder. If your largest customer scored your bid based on IP ownership tomorrow, which of your contracts would cost you the work?
Read the article: DAP 2026: Why owning IP is the key to India’s defence sovereignty, Major General Rajan Kochhar (Retd), ETGovernment.