Amidst Rising US Tariff Threats, India Halts Buying Six P-8I Surveillance Aircraft, Reevaluating Other Major Defence Deals

The Indian Ministry of Defence has put a hold on its plan to purchase six additional P-8I Poseidon maritime surveillance aircraft from the American company Boeing.

This decision comes as a direct response to new trade tariffs imposed by the United States on Indian goods and growing concerns over the deal's escalating cost, which had already risen to approximately $3.6 billion.

The move signals a significant reassessment of major defence agreements with the U.S. amidst rising trade friction. While the procurement is currently paused, sources within the ministry have indicated that it has not been permanently cancelled, leaving room for future negotiations.

Strategic Need Meets Financial Reality​

The Indian Navy has long advocated for expanding its fleet of P-8I aircraft, which are crucial for monitoring the vast Indian Ocean Region (IOR).

As the first international customer for the P-8I, India initially purchased eight aircraft in 2009 for $2.2 billion and followed with an order for four more in 2016 for over $1 billion. The current fleet of 12 is vital for tracking the increasing presence of Chinese naval vessels, including submarines, in the region.

The proposal to acquire six more aircraft was intended to bring the total fleet size to 18, enhancing surveillance capabilities.

The U.S. State Department had approved this sale in May 2021 for an estimated $2.42 billion.

However, by mid-2025, supply chain issues and other factors had caused the price to surge by nearly 50% to $3.6 billion, placing significant pressure on India's defence budget.

Tariffs Strain U.S.-India Defence Partnership​

The situation was intensified by the U.S. administration's recent announcement of a 25% tariff on Indian products, which took effect on August 7, 2025.

This move, part of a broader "America First" trade policy, was seen as an attempt to pressure India into increasing its purchases of American military hardware.

Indian officials expressed their disappointment, stating that the nation's defence procurement is based on strategic needs and national security assessments, not external trade pressures.

The halt of the P-8I deal is part of a wider pause on major American defence acquisitions, as India increasingly focuses on its "Make in India" initiative to promote domestic manufacturing and seeks to balance its trade deficit with the U.S. through other imports.

Operational and Economic Consequences​

Putting the deal on hold presents a challenge for the Indian Navy, which depends heavily on the P-8I for maritime domain awareness.

The existing fleet has already logged over 40,000 flight hours, highlighting the high operational tempo and the need for more aircraft to maintain effective surveillance over the busy IOR.

While assets like the recently acquired MQ-9B SeaGuardian drones and MH-60R helicopters provide support, they do not offer the same long-range, anti-submarine warfare capabilities as the P-8I.

Economically, the decision reflects the strain on India's finances, already committed to other high-value projects like the purchase of Rafale M fighter jets.

For Boeing, which has a significant industrial footprint in India employing around 5,000 people, a stalled deal could impact its local ecosystem, although its maintenance and support contracts for the existing P-8I fleet remain active.

Future of the Deal Remains Uncertain​

The future of the P-8I procurement now depends on a potential easing of trade tensions and price renegotiations. The Indian government's description of the pause as "halted but not definitively suspended" suggests that dialogue continues.

India may seek a more favourable price through the U.S. Foreign Military Sales (FMS) program or explore co-production arrangements, similar to those being discussed for other military platforms.

For the time being, India is carefully balancing its immediate operational requirements against pressing economic constraints and its long-term objective of achieving self-reliance in defence production.

 

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[Mc Addy]

We are now entering cold calculation phase with US, that is now Suddenly clear and present danger . We need to do work with what we got as even Europe will sing same tune as USA , nothing diffrent . We need to do a lot now ,on our own .

 

[Mc Addy]

Post-Phelgam, the relationship between us and the US administration has gone from good to very bad. All can see how Pakistan has been counted as an ally, given good treatment and that IMF bailout. It literally looked like a 3 billion reward for the Phelgam attack. All would have blocked such a bailout, but Trump okayed it, and none from Europe objected. Europe and the US work together; we are totally alone. Even the Russians can't be trusted, as they are now in an unclear situation themselves, so we need sense and austerity.

 

[DS]

A positive step by GOI.

Indigenous conversion of Tatas built C-295 aircraft is a first option.

Embraer from Brazil, is another option to consider.

Stryker for Army has failed in trials in Himalayas. Better indigenous option is Tatas WHAP which has a better engine .

GoI sending unambiguous message. Good.

Multi-million dollars defence contracts being cancelled which will hit USA. Ops Sindoor has shown the way to fast track indigenous military contracts at warp speed .

Let Defence Forces lead the way and clearly indicate to America, their mollycoddling of Pakistan is seriously frowned upon by us all.