India has paused a $3.6 billion deal to procure Boeing jets from the US after a sharp price hike driven by new tariffs.
The deal, originally approved by the US State Department in 2021 for six additional Boeing P-8I maritime patrol aircraft at $2.42 billion, has since ballooned in cost due to supply chain disruptions, inflation, and the 50% tariffs imposed by US President Donald Trump.
According to defence sources, the decision follows a nearly 50% surge in project costs, partly caused by Trump’s 25% tariffs in early August, which raised the price of parts and components for Boeing and were passed on to buyers, including the Indian government.
Multiple reports indicate that the Ministry of Defence has opted to pause the $3.6 billion Boeing jet acquisition and undertake a strategic reassessment.
The move comes amid surging costs, shifting geopolitical dynamics, and considerations of strategic autonomy. While defence sources suggest these factors are shaping the review, there has been no official confirmation from the Indian government regarding the deal or its suspension.
The supply chain for the Boeing P-8I aircraft reportedly includes Indian exports and components manufactured in India, which now face tariffs when shipped to the US or integrated into the final product. This has increased production costs for Boeing, which are ultimately passed on to India.
The development coincides with Air India beginning the retrofitting of its legacy Boeing 787-8 Dreamliners in the US. According to PTI, the first revamped aircraft is expected to rejoin the fleet by year-end after certification processes. Air India operates 33 Dreamliners — 26 of the older 787-8 model and 7 of the newer 787-9s. Once the first retrofit is complete and approved, the airline plans to send two legacy Dreamliners per month for upgrades.
These retrofitted Dreamliners will feature a three-class configuration, with 20 Business Class seats, 25 Premium Economy seats, and 205 Economy Class seats. (With inputs from agencies)
