India Freezes ₹31,500 Crore P-8I Poseidon Deal Amid US Tariff Dispute
In a significant move that could alter the trajectory of India-US defence relations, India has put on hold a major ₹31,500 crore (USD 3.78 billion) deal to acquire six P-8I Poseidon maritime surveillance aircraft from American aerospace giant Boeing. The decision comes as a retaliatory measure against US President Donald Trump’s recent imposition of a 50% duty on Indian oil imports from Russia.
The development, reported on August 3 by defence website IDRW, marks a decisive turn in New Delhi’s approach after weeks of measured silence on the tariff issue. India has consistently criticised what it calls “double standards” in Washington’s stance, noting that while the US and European nations continue importing substantial amounts of oil, gas, and fertilisers from Russia, India is being penalised for similar purchases.
The suspended deal is particularly noteworthy given the Indian Navy’s strong endorsement of the P-8I aircraft, known for its advanced capabilities in anti-submarine warfare and maritime surveillance. India currently operates 12 of these aircraft, with the first batch of eight purchased in 2009 for about ₹19,000 crore, followed by an additional four in 2016 for ₹8,500 crore.
The six additional P-8Is were approved by the US in May 2021, initially estimated at USD 2.42 billion (₹21,000 crore). However, due to rising costs, the final figure reached USD 3.6 billion (₹31,500 crore) by July 2025. Despite the cost escalation, India had been on the verge of finalising the purchase, considering the aircraft’s crucial role in monitoring Chinese naval activity in the Indian Ocean Region and Arabian Sea. The P-8I is equipped with NASM-MR anti-ship missiles boasting a range of 350 km, making it a vital asset for India’s maritime security.
The pause in negotiations could have wide-reaching consequences. For Boeing, it would mean a potential setback in one of its key international defence markets. The company employs around 5,000 people in India and contributes roughly USD 1.7 billion (₹15,000 crore) annually to the Indian economy.
For the Indian Navy, the delay could impact surveillance operations across its vast maritime domain, covering hundreds of naval vessels and about 20,000 merchant ships. However, defence experts suggest that this standoff might accelerate India’s push toward indigenous defence solutions. The Defence Research and Development Organisation (DRDO) and Hindustan Aeronautics Limited (HAL) are reportedly working on developing advanced indigenous maritime patrol aircraft as cost-effective alternatives.
This latest defence freeze underscores how trade disputes can spill over into strategic and security cooperation. As India and the US navigate their increasingly complex relationship, the outcome of this standoff will be closely watched by defence analysts and geopolitical observers alike.
