India freezes $3.6B P-8 Poseidon deal amid Trump tariff dispute

India has put negotiations for six additional Boeing P-8I Poseidon maritime patrol aircraft on hold, as trade tensions with the United States escalate over New Delhi’s energy ties with Russia. 

According to Indian media, the Indian Ministry of Defense suspended contractual discussions after the US Government announced a 25% tariff on Indian imports on August 6, 2025, citing the country’s continued purchases of Russian crude.  

The main reason cited is reportedly that the deal, initially approved by the US Defense Security Cooperation Agency in 2021 for $2.42 billion, has since seen its estimated cost rise by 50%, to around $3.6 billion. 

The decision leaves the Indian Navy with its current fleet of 12 Poseidon submarine hunters, short of the 18 aircraft it has identified as necessary to monitor growing Chinese naval activity in the Indian Ocean, including submarines and survey vessels. 

Tariffs over Russian oil purchases 

The White House claims the tariff hike was imposed due to New Delhi’s continued purchase of Russian oil, arguing that such imports “undermines US efforts to counter Russia’s harmful activities”. 

“India is not only buying massive amounts of Russian oil, they are then, for much of the oil purchased, selling it on the open market for big profits,” Trump said. ”Because of this, I will be substantially raising the tariff paid by India to the USA.” 

Since the start of the war in Ukraine, India’s imports of Russian hydrocarbons are said to have surged to more than $57 billion. 

New Delhi rejected the measure as a “double standard,” noting that China imported nearly $63 billion worth of Russian oil in 2024 without facing comparable penalties. 

US–India defense ties have deepened in recent years, with Washington withholding sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) despite India’s continued procurement of Russian arms. The US has supplied India with CH-47 Chinook, MH-60R Seahawk and AH-64E Apache helicopters, plus MQ-9B SkyGuardian drones. 

The Indian Navy was Boeing’s first international customer for the P-8 Poseidon, ordering the aircraft in 2009 and taking delivery of its first example in 2013. Based on the 737-800 airframe, the P-8I variant supplied to India is equipped with locally integrated sensors and communications systems.  

The fleet has since operated from INS Rajali in Tamil Nadu, monitoring the vast stretches of the Indian Ocean. 

Broader procurement review 

Indian officials say the tariff dispute has prompted a wider review of planned US defense acquisitions. The P-8I suspension comes just days after India formally ruled out purchasing Lockheed Martin’s F-35, with New Delhi stating it was more focused on partnerships involving joint development and local production, consistent with its ‘Make in India’ and ‘Aatmanirbharta’ (self-reliance) policies. 

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Further programs could now be at risk, including those involving the General Electric F404 F2J3 engine that powers Hindustan Aeronautics Limited’s Tejas fighter jet.  The post India freezes $3.6B P-8 Poseidon deal amid Trump tariff dispute appeared first on AeroTime.

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