Nice biased distortion of the reason.
1. Boeing was going to offer India a variant of the USAF-spec KC-767, not the Italian/Japanese-spec version.
2. Boeing simply knows that, if the USAF again chooses the Airbus KC-45, that India won't pay for the development of the variant, and will kick it out of the contest on cost grounds.
3. Thus, Boeing would lose all money it put into the Indian tanker bid effort.
4. In order to remain in the contest, Boeing would have to offer to pay for much of the development costs themselves, thus losing massive money on the deal.
It is simply a business act... without a guarantee of the USAF paying for the development of the new version of the KC-767, Boeing will lose money on the Indian deal no matter what they do, therefore there is no reason to bid.