India’s optimal approach for securing a favorable trade deal with the US involves strategic steps, as per a recent SBI Research report. The report suggests maintaining a positive dialogue, refraining from public disputes, and offering limited concessions initially. It recommends waiting for the US administration’s initial demands to collide with market costs, China-related concerns, and alliance dynamics.
Dr. Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India, emphasizes the importance of India standing firm and testing the US administration’s resolve. The report advises India to delay negotiations until Washington’s bottom line is clearer and India’s value as a market, technology partner, defense buyer, and Indo-Pacific player is more evident.
Highlighting the US administration’s use of uncertainty as a negotiation tool globally, the report underscores India’s strategic position between NATO allies and China. While lacking China’s dominance, India possesses significant leverage in various sectors, including market size, technological expertise, pharmaceuticals, defense acquisitions, and Indo-Pacific influence.
In the realm of game theory, the US administration maintains ambiguity regarding its bargaining tactics, leaving the other party to decide on responses such as conceding, waiting, testing, or escalating. The report notes that while short-term gains may include leverage, long-term implications could involve a decline in trust with the US due to repeated uncertainties.
The report also touches on the ongoing uncertainty following the US-Iran MoU signed on June 17 to halt hostilities. Despite the agreement, shipping data in the Strait of Hormuz indicates a gradual rather than comprehensive resumption of traffic. While some sectors like crude oil show limited recovery, others such as LNG and fertilizer shipments remain notably absent.
