There are plenty of people involved in acquisitions and as is the case anywhere there are plenty of varied opinions formed. These opinions are debated and the best opinions are chosen. The American technology comes with strings attached and have ToT constraints. Therefore this seems like a political decision. However things are not as simple as they seem.
What your friend said is correct, as it stands today the SH is way ahead of the competition. Even F-16IN does not come close to it and even the F-16 is ahead of the competition. But, the truth is what the Europeans offered was even ahead, albeit it is still under development. This gives us the flexibility of having avionics developed according to our own specifications. If we consider the SH to be a benchmark for 4.5th gen then today's Rafale and EF are clearly 4th gen aircraft. If we consider Rafale and EF to be 4.5th gen then you could say SH is 4.75th gen. But if we compare the SH with today's specifications and compare it to Rafale or EF of tomorrow, then the reverse is applicable because what matters is what is offered and not what exists. What was offered by Boeing was the SH of today and what was offered by the Europeans were the Rafale and EF of tomorrow, with AESA, towed decoys, ECM suites and the works.
Whatever was offered on SH can be achieved on a higher scale on EF and Rafale over the next 20 years. The fact is there is no well defined technology road map for the American and Russian planes as compared to the Europeans. The French like their Rafale and the Germans are quite serious with EF, with neither showing interest in the F-35. The Air forces and Navies of US and Russia have no interest in the old platforms considering one country has better replacements like F-35 and the other simply cannot afford a new type. The only options were the 3 European aircraft. Considering Gripen is a LCA, it's capabilities cannot be compared to the heavier twin engine counterparts. Thus the best options were Rafale and EF. ToT is also forthcoming. There was no real point in considering the SH in such a situation, political or not.
Considering Rafale and EF are superior in design to other aircraft, avionics becomes a moot point since we are still years away from getting our first squadron. The avionics the SH has been brandishing today could become junk tomorrow. It is the same as how the F-15C has inferior avionics to that of the MKI today, even though the F-15 came a decade earlier than the Su-27.