India should test resolve of US administration on trade deal, keep conversation warm: SBI report

New Delhi, July 10 (IANS) India’s best strategy to get the best trade deal with the US is to wear down the opening position, not the relationship, keep the conversation warm, avoid public escalation, make limited and reversible offers, and wait for the Donald Trump Administration’s first demand to run into the US market costs, China-balancing needs and alliance fatigue, an SBI Research report said on Friday.

Then bargain late, when Washington’s reservation price is clearer and India’s value as a market, technology partner, defence buyer and Indo-Pacific counterweight is more visible, the report mentioned.

“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, State Bank of India.

The US Administration is using uncertainty as a bargaining instrument across NATO, Iran, tariffs, Greenland, China and also India.

India sits between NATO allies and China. It does not have China’s concentrated chokehold, but it has meaningful leverage: market scale, technology talent, pharmaceuticals, defence procurement, energy optionality, diaspora influence and Indo-Pacific value.

In game theory terms, US Administration is preserving incomplete information about the “type” of bargaining. In this context, the other side must 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. Alternatively, if every partner learns that the final US position will be adjusted when costs rise, the bargaining value of the signal declines,” the SBI report noted.

Meanwhile, the uncertainty still persists as even after the MoU has been signed between the US and Iran to end the war on June 17. However, the shipping data through the Strait of Hormuz shows only limited and uneven signs of restarting.

There has been only gradual return of flows rather than a broad normalisation of traffic. While, crude flows have restarted in a limited way, agricultural inbound shipments show only a tentative and incomplete recovery, but LNG and fertiliser-related shipments remain effectively absent, said the report.

—IANS

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