India has reportedly put a halt to a $3.6 billion deal to purchase Boeing aircraft from the US after US President Donald Trump imposed 50 percent tariffs. The US State Department authorised the initial $2.42 billion purchase of six more Boeing P-8I maritime patrol aircraft in 2021. Inflation, supply chain delays, and Trump’s tariffs have all contributed to the recent spike in the price.
According to reports citing India’s Ministry of Defence sources, the decision was taken due to a nearly 50 percent hike in project costs. The sharp spike in price has been driven in part by the 25 percent tariffs imposed by Trump at the beginning of August — which made parts and components related to the aircraft procurement significantly more expensive for Boeing. These costs have since been passed down to the Indian buyers.
The Ministry of Defence has reportedly decided to halt the purchase and carry out a strategic review as a result. The ultimate decision will probably be influenced by elements including growing expenses, shifting geopolitical conditions, and strategic autonomy. However, the Indian government has not formally confirmed the deal or its suspension.
The changes occurred when Air India started shipping its old Boeing 787-8 Dreamliners to the US for retrofitting. The first redesigned plane was expected to join the fleet by the end of the year, according to sources who spoke to PTI. Air India operates 33 Dreamliners in total, comprising seven Boeing 787-9s and 26 heritage Boeing 787-8s.
There will be several certification processes for the first legacy Dreamliner, which has been retrofitted at a Boeing plant in the US. By the end of this year, the modified aircraft—which will also serve as the model for the others—should be part of the fleet. According to the sources, the airline plans to send two legacy Dreamliners for retrofitting each month after that is finished.
Meanwhile, India’s Prime Minister Narendra Modi will preside over a high-level cabinet meeting on Friday discuss the effects of the recent tariff hike imposed by the US on Indian exports.
Trump has ruled out holding trade talks with India until the tariff dispute is settled. When asked if he anticipates increased trade talks with India after he imposed 50 percent tariffs on the country, the US president responded in the Oval Office on Thursday saying, “No, not until we get it resolved.” Trump announced last week that reciprocal tariffs of 25 percent on India would come into effect on Aug 7.