India freezes $3.78 billion P-8I Poseidon deal with US amid tariff spat over Russian oil: Report
New Delhi: In a sharp escalation of trade tensions, India has reportedly suspended a $3.78 billion (₹31,500 crore) defence deal with the United States in retaliation for President Donald Trump's imposition of a 50% duty over Indian oil imports from Russia, media reports said.
The decision, seen as a strong diplomatic signal, targets the long-pending purchase of six P-8I Poseidon maritime surveillance aircraft from American aerospace giant Boeing.
According to a report by IDRW, the move came on August 3, shortly after the Trump administration revived warnings over India’s continued oil imports from Russia.
New Delhi, however, has rejected what it calls Washington's “double standards,” pointing to continued US and European energy imports from Russia, including oil, gas, and fertilizers.
India hits pause on strategic maritime deal
The P-8I aircraft—highly valued by the Indian Navy for their anti-submarine and surveillance capabilities—were part of a strategic acquisition to bolster India’s maritime edge, especially amid increased Chinese activity in the Indian Ocean and Arabian Sea.
India already operates 12 P-8I aircraft, having first procured eight in 2009 for $2.2 billion (then about ₹19,000 crore), followed by four more in 2016 for ₹8,500 crore.
The latest batch of six aircraft was cleared by the US in 2021 for $2.42 billion, but cost escalations pushed the deal’s value to nearly $3.6 billion by July 2025, just weeks before the reported freeze.
Despite the rising cost, Indian defense planners were believed to be close to finalizing the purchase, citing the P-8I’s operational success and crucial surveillance coverage for India’s vast maritime domain.
Backlash over tariff threat and ‘hypocrisy’ charge
President Trump's renewed threat of a 50% import duty on Indian oil over ties with Moscow has drawn sharp criticism in New Delhi, with officials citing a CREA report that challenges the logic behind the US move.
“While the US and EU continue to buy significant volumes of Russian energy, punishing India for its independent energy choices is both hypocritical and politically motivated,” a senior official was quoted as saying.
After weeks of silence, India publicly pushed back against the US stance earlier this month and has now followed up with what appears to be its first major economic countermeasure.
Potential fallout for Boeing and Indian surveillance capabilities
The suspension is likely to hit Boeing hard. The US manufacturer, which employs around 5,000 people in India and contributes an estimated $1.7 billion (₹15,000 crore) annually to the Indian economy, was counting on the P-8I sale as a key transaction in the region.
While the halt may dent the Indian Navy’s expansion plans—especially its surveillance of a maritime area involving thousands of naval and merchant vessels—New Delhi is reportedly exploring indigenous alternatives.
Agencies like DRDO and HAL are already working on domestic maritime reconnaissance platforms, and the high cost of foreign equipment is reinforcing the push for self-reliance.
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