 "The logo of American aircraft manufacturer Boeing. Reuters")
As the US increases tariffs on Indian goods , reports are emerging that New Delhi has pressed a pause button on a whopping $3.6 billion deal to procure Boeing aircraft. The original deal involved the purchase of six additional Boeing P-8I by India, which was approved by the US State Department back in 2021 for $2.42 billion.
These aircraft were intended to be used as maritime patrol aircraft. The price of the deal eventually soared in the ensuing years due to supply chain disruptions, inflation, and the tariffs imposed by Trump. According to a report cited by the Financial Express, the decision to pause the deal was taken because of the White House’s move to increase tariffs on India by nearly 50 per cent.
Defence sources noted that the price spike due to tariffs made parts and components related to the aircraft procurement significantly more expensive for Boeing. These costs have since been passed down to the buyers, in this case, the Government of India.
Air India sends Boeing aircraft for retrofitting
Reports cited by the Financial Express suggested that the Ministry of Defence has therefore chosen to pause the acquisition of the Boeing aircraft and will be conducting a strategic reassessment of the deal. The assessment would include analysing factors such as rising costs, evolving geopolitical dynamics, and strategic autonomy, which are likely to play a crucial role in making the final decision.
However, there has been no official confirmation from the Indian government about the deal or its suspension. The report of the pause came days after US President Donald Trump imposed high tariffs on Indian goods, citing concerns over New Delhi’s move to purchase oil from Russia amid the war in Ukraine .
Interestingly, the developments also came as Air India began sending its legacy Boeing 787-8 Dreamliners for retrofitting in the US. Sources close to the matter told PTI that the first revamped jet was likely to join the fleet by year-end.
Impact Shorts
View AllIt is pertinent to note that there are a total of 33 Dreamliners with Air India: 26 legacy Boeing 787-8s and 7 Boeing 787-9s. The retrofitted plane would also be a template for the remaining ones, with the process being completed by the end of the year. Once the first aircraft is retrofitted, the airline aims to send two legacy Dreamliners every month for retrofitting, the sources said.
These retrofitted planes will include a three-class configuration, each comprising 20 Business Class, 25 Premium Economy and 205 Economy class seats.
With inputs from PTI.