F 35 can scare China more than Rafale. F35 can prove to be very effective against Chinese AC and ships in ocean. It can perform certain missions which Gripen can not perform. However, Gripen too have some great capability. We need atleast 2 to 3 squadron of both plane in addition to what we have as stop gap.
The F-35 only acts as deterrence against China, it's not good enough to defeat China, especially if we buy only 36. If the goal is to replace MRFA with F-35, unlikely to happen, then 120+ could make a difference. But 36 F-35s is a huge problem for PAF to deal with.
Anyway, take it with a pinch of salt. Even if Trump offers the F-35, whether the IAF is interested or not, the F-35 still has to achieve clearance and set the path forward for up to 30 years before it's ordered. So the IAF could still buy 36 F4s instead or wait for MRFA. We did the same to the Russians before considering any F-35s.
The IAF will still prioritize the MRFA + AMCA path.
There's no interest in Gripen. It's a possibility only if LCA Mk2 fails, but by then the IAF could just order more Mk1A/B and MRFA instead.