India's Trade Waiting Game Has a Split at Home

On July 10, the State Bank of India published something you don't usually see from a government-owned bank: an explicit playbook for outlasting the United States in a trade negotiation. SBI's chief economist Soumya Kanti Ghosh advised India to offer only limited, reversible proposals, accept high short-run costs, and wait for American demands to run into market pressures and alliance fatigue ^[1]. Two days earlier, the economist and former government advisor Surjit Bhalla had argued the opposite: sign a comprehensive deal immediately, because every month of delay lets China pull further ahead ^[2].

whether time favors India in US trade talks

Wear them down — SBI, July 10: Soumya Kanti Ghosh frames attrition as the strategy: test the resolve of the US administration, accept high short-run costs, and wait for tariff threats to meet domestic economic resistance. The bet got its first validation on July 9, when Trump deferred aircraft import tariffs despite a national-security finding ^[1][3].

Sign now — Bhalla, July 8: Bhalla calls a comprehensive US deal the most critical economic reform India needs and warns that delay makes China the primary beneficiary. The costs are already visible: garment exports down 14.1% year-over-year for six straight months, while Vietnam just secured an EFTA FTA that opens third markets India is losing ^[2][4][5].

The government chose its side before the bank made it explicit. Readers who have followed this beat will recall Commerce Minister Piyush Goyal pressing for a fast US deal in early May. What changed between then and late June is the hinge of everything that followed. On May 10, the US Supreme Court struck down Trump's reciprocal tariffs, imposed under emergency economic powers, and ordered $159 billion in refunds ^[6]. The ruling removed the primary instrument Washington had been using to force concessions. The administration then searched for replacement authority: Section 301 forced-labor investigations and a narrower 10% global tariff that expires July 24 unless Congress extends it ^[7][8]. By June 24, Goyal had shifted from urgency to its opposite.

India never negotiates with a deadline. — Piyush Goyal

He also set an explicit condition: India would not implement a deal until the tariff framework guaranteed a competitive edge over China and Vietnam, not just equal access ^[9]. The timing tells the story. Goyal's shift from urgency to patience tracks the court ruling that stripped Washington of its main leverage. India's negotiators had already been refusing to sign without guaranteed advantage over Vietnam. The SBI report formalized a posture the government was already implementing. What makes the bet look rational from Delhi is that Washington is blinking on its own tariffs. On July 9, Trump deferred immediate aircraft import tariffs despite a national-security finding that justified them, choosing negotiation after industry pushback ^[3].

I determine that it is necessary and appropriate to enter into negotiations with trading partners to adjust the imports of commercial aircraft, jet engines, and their associated parts so that such imports will not threaten to impair the national security of the United States. — Donald Trump

That is precisely the outcome SBI's model predicts: tariff threats meet domestic costs, and the administration backs down. Trump's own background assessment of India, that Indians resist paying for anything ^[10], suggests US negotiators already see Delhi as stubborn, and SBI is betting the president lacks the legal tools to force change before the July 24 deadline. But the attrition costs are not abstract, and they don't fall on the negotiators. Indian garment exports have dropped for six consecutive months, down 14.1% year-over-year, as US buyers demand discounts and Vietnam, Indonesia, and Cambodia absorb market share ^[4]. Meanwhile, Vietnam, the competitor India most wants tariff advantage over, just concluded a free trade agreement with EFTA (Switzerland, Norway, Iceland, Liechtenstein) on July 2, as Trump's tariffs pushed Switzerland to diversify ^[5]. India is wearing down the United States while Vietnam builds preferential access in third markets. India is also building. Goyal announced negotiations with 20+ countries on top of nine existing FTAs ^[11]. A New Zealand deal was signed July 8 ^[12]. India and South Korea jointly challenged US Section 301 forced-labor tariffs on July 7 ^[7]. And the July 9 customs duty waiver on electronics components, extended to March 2029, is a unilateral industrial policy move, not a US concession, aimed at a $500 billion electronics manufacturing base ^[13]. Total exports hit a record $863 billion in the last fiscal year ^[14]. The reader who has followed this beat has seen the broader architecture: the Indo-Pacific ties, the EU FTA, the Israel talks. The parallel network cushions the cost of holding out. But SBI's own report flags the tension inside its strategy.

The short-run payoff is leverage. The long-run cost is trust depreciation with the US. — SBI PO Exam

The question that report raises but doesn't answer is the one Bhalla is pressing. If the attrition costs fall hardest on the exporters India is supposedly protecting, garment workers losing orders to Vietnam, while the alternative network India is building reaches high-income economies that don't cover those supply chains, then the strategy may be wearing down the wrong side. The deal that finally comes may arrive after the ground it was supposed to protect has already been lost.