The thing that needs to be kept in mind here is:
Will the Indians be willing to pay the huge price of the F-35 (which ever model is bought)?

Remember how the Indian’s always sign up for buying things but take years to negotiate a lower price by which time the cost has come down anyway so they try to lower it further!

Will the US (who really need funds atm) be willing to lower the price of the lightning to allow India to buy any? Given the recent debacle of the old Russian Spy ring in the US (what a joke that was), would the us allow the Indian’s to buy their premier fighter knowing that the Russians would some how get a look at them and thus produce a competitive version at a cheaper price some time after?

Sure the US have started selling various military systems to India (the P-8 for starters), but that’s all low risk sales, the F-35 comes in as a high risk item and I don’t think the US are willing to go down that path. So while LM might be offering it, selling it isn’t in their court, it’s down to Congress who I would be really shocked if they said yes!

Seems like the US Govt has given the go ahead to LM to market the F-35 to IN since they’ve had multiple presentations on this with the IN and are going to respond to IN’s RFI. The US has also had NG aggressively marketing the E-2D Advanced Hawkeye to the IN. I’m not sure that they’d market these to the IN unless at some level they did get a go ahead. I know that its one thing to get preliminary agreements from the US Govt. to market a product with presentations but quite another to get full blown licenses, but how likely the F-35 will be for the IN will likely depend on how much technology access they demand. I find it highly unlikely that the IAF will take any interest in the F-35, since they have the PAK-FA’s FGFA, so that leaves a small purchase of 40-50 F-35s the most likely option, for which ToT and local assembly may not be required (as in the case of the MiG-29K). That should ease US concerns over technology transfer.

Don’t forget that the IN is the first international customer for the P-8 and the deal was signed in record time (by Indian standards). The P-8I will almost concurrently enter service in both USN and IN, which indicates that the level of trust on the part of the US is not as low as you seem to think.

Your points also don’t hold any water when one looks at the C-130J deal, for which the IAF took a specialized Special Forces version of the aircraft that costs more than what is being sold to most other countries..And apparently the follow-on options for 6 more will be converted soon too. The deals that are being signed through FMS don’t seem cheap by any standards and the now in the news C-17 deal also bears that out.

One more item- the F-35’s price is not as exhorbitant as many people have been made to think. From RAAF’s recent quotes, one is inclined to think that the F-35 will be a sub-$ 100 million fighter, albeit with export variants at lower levels of capability than the US versions. I’m aware that the RAAF version is the F-35A, but with large USMC and USN as well as RN orders, the F-35C and B shouldn’t be substantially more expensive, IMO.