India rules out F-35 purchase amid Trump’s tariff threat

India has rejected a proposal to purchase F-35 stealth fighter jets from the United States, even as it explores other options to defuse escalating trade tensions following President Donald Trump’s surprise threat to impose a 25 per cent tariff on Indian goods.

Despite Trump’s offer during Prime Minister Narendra Modi’s visit to the White House in February, Indian officials told Bloomberg that New Delhi has informed Washington it is not interested in buying the expensive warplanes. Instead, the Modi government is seeking a defence relationship focused on joint design and domestic production of military equipment, Caliber.Az reports.

The decision comes amid a broader effort by India to avoid immediate retaliation and instead explore ways to placate the White House through increased imports of US goods. According to people familiar with the matter, India is considering ramping up purchases of natural gas, communication equipment, and gold — measures that could help reduce its trade surplus with the US over the next few years.

Officials in New Delhi were reportedly shocked and disappointed by Trump’s July 30 tariff announcement, with one source describing it as a major blow to ongoing trade talks. Still, the government appears intent on keeping negotiations on track and avoiding escalation.

Commerce Minister Piyush Goyal told Parliament on July 31 that the implications of the tariff threat are under review. 

“The implications of the recent developments are being examined,” Goyal said, amid loud opposition protests. He added that the ministry is consulting exporters and industry groups and will take “all necessary steps to secure and advance our national interest.”

India has also reserved its right at the World Trade Organization to retaliate at a time of its choosing against higher US duties on steel and automobiles.

While Trump and Modi had previously shared friendly ties and expressed optimism about finalising a trade deal, the US president's latest comments have raised concerns in New Delhi. On July 30, Trump criticised India for its high tariffs and labelled its trade barriers as “strenuous and obnoxious.” He also threatened penalties over India’s continued purchases of Russian energy and weapons.

Just hours after suggesting that Washington and New Delhi were still in talks, Trump posted on Truth Social: “I don’t care what India does with Russia,” calling both countries “dead economies.”

US Treasury Secretary Scott Bessent further fuelled tensions on July 31, blaming India for the slow progress in trade negotiations. 

“The whole trade team has been frustrated,” he told CNBC, accusing India of not being a “great global actor” due to its ties with Moscow.

India’s government maintains that it is committed to securing a “mutually beneficial” trade deal. Both sides had agreed to wrap up negotiations by the fall, and US officials are expected to visit India in the coming weeks.

The US had a $43 billion trade deficit with India last year — significantly lower than its deficits with countries like Vietnam. Earlier this month, Trump announced a 20% tariff on Vietnamese goods.

Some analysts remain cautious in interpreting Trump’s moves. 

“Trump being Trump, we can’t be sure,” said Abhijit Das, a New Delhi-based international trade expert. “This could be a negotiating ploy as he did something similar with the EU.”

India’s financial markets reacted to the developments, with the rupee dropping as much as 0.4% to 87.7375 per dollar before slightly recovering. The benchmark NSE Nifty 50 Index fell 0.5%, after earlier declining by 0.9%.

By Sabina Mammadli