This article traces the impact of superpowers’ foreign aid on India and Pakistan during the early decades of the Cold War. It shows how the American policy-makers have drawn their initial strategies to bring India under the Western fold and later, when the Indian leadership resisted by adopting the foreign policy non-alignment, charted a new approach to keep it at an adequate distance from the Soviet influence—particularly by exploiting its food insecurity and inability to complete the five-year plans. In contrast, the Soviet Union extended project-aid to India which assisted it to build much required large industrial base and attain self-sufficiency in the long run. By adhering to the non-aligned doctrine, India not only managed a negotiable balance with the superpower politics but also extracted considerable benefits for its overall development. On the other hand, aligned Pakistan had shown least enthusiasm with regard to self-sufficiency and pursued policies imbued with militarism which ended up it as a rent-seeking dependent state.