Mercy....the guy I know did not bribe, as I said OCI is like a green card. This DG has been in the job for less than 2 years, and he is not that well informed. Know your rights, if I were you I would go to the Ministry of Home Affairs and clear this, what you need is to know your rights, what you are able to do and what you are not. Many OCI's are able to work in professions (private, non-government) that are reserved for Indian nationals only. Have faith, that there are guys out there who can also show you rules that will favour your case. Do it in a non confrontational way, just by the book and quote the rules, get the N.O.C from MHA regarding license conversion.
The DG will be unable to argue with the MHA in the case of your status in India as a "green card" holder. Many guys are still flying with OCI and Indian license without bribing -"Not likely to happen?" Is the DG wearing blinkers?
Keep us updated.