Indian Defense Ministry spokesman Sitanshu Kar told CNN that multinational Eurofighter and France's Dassault Aviation remain in the competition for the big military deal.
"Boeing and Lockheed have been eliminated in the elimination round (of the bidding)," Kar said.
The process to acquire advanced fighter jets may be completed by the end of the current fiscal year, he added.
The move came barely five months after U.S. President Barack Obama's visit to India.
Earlier Thursday, the U.S. Ambassador to India Timothy Roemer announced his decision to quit the post in June for what an embassy statement called "personal, professional and family considerations."
Hours later, Roemer expressed his disappointment at India's rejection of U.S. firms for what is believed to be one of the largest fighter-jet contracts. (read more)