“Although partly funded by US it got scrapped because the US did not want a competitor for its own aircraft. Israel could not afford to produce it only for domestic use so end of deal.”

http://www.jewishvirtuallibrary.org/jsource/Society_&_Culture/lavi.html

pinched
“Grumman was responsible for the design and development of the wing and the fin, and would produced at least the first 20 wings and fins.”

It used an American engine, American wings and the fuselage off the F-16. Not sure why you call it an Israeli aircraft? IIRC, Turkey produces the F-16, or at least assembles them from imported subsections. Does that make the F-16T a Turkish aircraft? The F-16 is produced by several nations. Israel just bolted a different wing on theirs.
I think the problems had more to do with Grumman then Israel. At the time, there were serious issues with how Grumman Marketed the F-14. People went to jail. The F-14 order was curtailed. Grumman was under a cloud. Washington wanted Grumman out of business. Building parts for foreign nations seemed to be a way to get out from under the boot of DoD. DoD wasn’t all that happy about that. Or at least that is what I remember from those days. My memory ain’t what it used to be.
Sometimes it isn’t all about the Jews. Co-ink-see-dink does happen, just not very often.