It was recently reported that subsequent to United States imposition of 50 per cent tariffs, India has put a hold on a $3.6 billion deal to procure six additional Boeing P-8I aircraft, used for maritime patrol. As trade tensions escalate between New Delhi and Washington, the ripple effects may soon reach India’s entire aviation industry, and if left unchecked, this escalation could deal a significant blow to India’s aviation ecosystem, disrupt procurement cycles, and chill the otherwise growing strategic partnership between the two democracies.

While the current list of tariffs has largely spared aerospace goods, analysts warn that the inclusion of aircraft parts, avionics, and dual-use technologies in future rounds of duties cannot be ruled out — especially if talks between the two trade ministries continue to stall.

IMPACT ON CIVIL AVIATION

India’s civil aviation sector is undergoing a historic expansion. Major carriers like IndiGo, Air India, and Akasa Air are on aggressive fleet expansion paths, with hundreds of aircraft on order — many from American manufacturers like Boeing.

If tariff barriers are raised on aircraft components, engines, navigation systems, or MRO tools, the cost structure for Indian airlines could be severely impacted. Operating margins, already squeezed by high fuel costs and airport charges, would come under further pressure. For budget carriers, even a 5–7 per cent increase in component costs can have cascading effects on ticket pricing, route viability, and profitability.

Furthermore, the trade tensions may cause delays in customs clearance of imported parts, leading to longer aircraft groundings. This is particularly risky in a market like India’s where aircraft utilisation is among the highest globally, and spare inventory levels are lean by design. In short, the very reliability of day-to-day operations could be compromised if these trade issues bleed into the aviation supply chain.

FALLOUT IN MILITARY AVIATION

The implications grow even more profound in military aviation. India has increasingly turned to the United States for advanced aerial platforms, components, and joint development initiatives. Any trade friction that touches upon aerospace parts, software updates, or logistical support packages could impede mission readiness. India’s contract structures often involve offset clauses and performance-based logistics agreements which are highly sensitive to parts delivery timelines and technical documentation exchanges. A tariff barrier or customs dispute may slow down these interactions. Moreover, several ongoing procurement negotiations could become entangled in a politically charged atmosphere if trade tensions worsen. The larger risk is that mutual confidence in the reliability of supply lines could erode, pushing India to diversify more aggressively toward European/Russian or indigenous platforms even where the US offers technological superiority.

STRATEGIC PARTNERSHIPS AT RISK

As per recent reports, American President Donald Trump’s visible attempts to bully India have begun casting doubts on QUAD. Commentators have begun prospects of Prime Minister Narendra Modi cancelling the 2025 QUAD Leaders’ Summit which is to be hosted by India. The ongoing trade friction undermines the very spirit of the India-US strategic partnership, which has been carefully built over decades through mutual alignment on democracy, maritime security, counter-terrorism, and Indo-Pacific stability.

American OEMs have been increasingly integrating Indian firms into their global supply chains, with manufacturing facilities, engineering centres, and digital tech hubs established in India. Any deterioration in trade relations may compel US aerospace firms to reassess future investments or local production plans, slowing India’s goal of becoming a global aviation hub. Also, protectionist sentiment in the US could trigger domestic calls to restrict technology transfers or tighten export licences, even for dual-use systems.

PROTECTING A HIGH-ALTITUDE PARTNERSHIP

India has made significant strides in defence indigenisation but the capital and technology intensive road to self-reliance in aerospace and defence is long and arduous. Till the time India does become ‘Atmanirbhar’ in these critical sectors, it needs to play the balancing game with its foreign partners. The risk of short-term trade disputes undermining long-terms trust between the two nations is real, just when the geopolitical stakes are at their highest.

Trade spats are common, but when they begin to impact national security and critical infrastructure, the stakes escalate dramatically. It is imperative for India and the United States to insulate aviation — particularly military aviation and high-tech collaboration — from the spillover effects of tariff politics. Diplomatic backchannels must prioritise exemptions or special carveouts for aerospace and defence trade, recognising the long-term strategic value of these sectors. Exemptions for aerospace components, proactive diplomatic engagement, and a bilateral technology dialogue mechanism offer the path forward.