This must be seen in the light of the balance of military power during the 1990s.
Desert Storm cast its shadow over that decade: the spectre of a United States that had got over its post-Vietnam reluctance to engage in military adventures overseas, which was no longer deterred by the threat of military challenge from a now-defunct Soviet Union, and which had amassed so much military-technological superiority over other countries during the 1980s that it could make short work of Saddam's army (a well-trained, well-equipped, large, and battle-hardened fighting force by most standards).
Now consider this passage from the article posted earlier by Shiv:
If weapons comparable to the Honest John battlefield missile or the Davy Crockett nuclear bazooka made it into Viet Cong hands the results would have been catastrophic. "If about 100 weapons of 10-KT yield each could be delivered from base parameters onto all 70 [US] target areas in a coordinated strike," wrote the JASONs, "the U.S. fighting capability in Vietnam would be essentially annihilated [emphasis added]."
Even a few VC retaliatory nukes fired from time to time rather than all at once would have seriously degraded U.S. military capacity in Vietnam.
Therefore: a few tac nukes in Saddam's hands would have changed the course of the 1991 Persian Gulf War completely, making it much more costly for the Americans to win.
Desert Storm haunted military planners in many countries, including India. In purely conventional warfare, it seemed in the 1990s that the US was supreme, and no country could challenge or resist it. Add to this the increasing appetite of the US and its NATO allies for getting involved in foreign wars to balkanize other nations, including Yugoslavia. Also add the motivated campaign being waged by Robin Raphel and others on Pakistan's behalf to separate J&K from India.
It seemed clear that the US had to be deterred from any sort of conventional military adventurism against India. Deterring the US' conventional strength with strategic nukes was out of the question (we didn't have anything like a credible delivery mechanism with sufficient range, let alone a nuclear triad, at the time). The strategic nukes were for Pakistan and China, period.
So what would deter the US from mounting a "Desert Storm" against India on Indian territory? Only the capacity to massively punish their deployments in areas of high concentration... with tactical nukes.