SBI To India: Stay Patient, Test Washington’s Resolve On Trade

NEW DELHI- India’s best strategy to secure a favorable trade deal with the US is to wear down Washington’s opening position without damaging the relationship, keep negotiations going, avoid public escalation and make limited and reversible offers, an SBI Research report said on July 10.

India should wait for the Trump administration’s initial demands to encounter US market costs, China-balancing needs and alliance fatigue before bargaining at a stage when Washington’s position is clearer and India’s value as a market, technology partner, defense buyer and Indo-Pacific counterweight becomes more visible, the report said.

“India’s strategy should be to test the resolve of the US administration and potentially accept a high cost follow through in short run and signal that India stands its ground for the long game. Dive sideways and test the resolve. India will win,” said Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India.

The report said the Trump administration is using uncertainty as a bargaining instrument across issues involving NATO, Iran, tariffs, Greenland, China and India.

India, it said, does not have China’s concentrated leverage but holds significant advantages, including its market scale, technology talent, pharmaceutical sector, defense procurement, energy options, diaspora influence and strategic importance in the Indo-Pacific.

In game theory terms, the Trump administration is preserving incomplete information about the “type” of bargaining, forcing the other side to decide whether to concede, wait, test or counter-escalate, according to the report.

“The short-run payoff is leverage. The long-run cost is trust depreciation with the US. Interestingly such repeated uncertainties also teaches allies, rivals and markets to discount future signals,” the SBI report noted. (IANS)