In the world of international trade negotiation, there is a meaningful strategic difference between seeking parity with your competitors and seeking outright advantage over them — a distinction that lies at the heart of India's current, protracted negotiating posture in its ongoing trade talks with the United States. Commerce and Industry Minister Piyush Goyal has been unusually explicit and consistent in articulating this distinction: India, he has repeatedly signalled, is not simply negotiating for tariff terms comparable to what competing Asian exporting nations like Vietnam and Bangladesh have secured from Washington, but for terms that place Indian exporters in a genuinely superior competitive position relative to these rival manufacturing hubs.
This is a notably more ambitious, and considerably more difficult to achieve, negotiating objective than simply matching whatever terms competitors have already locked in, and understanding why India has adopted this particular strategic posture — along with its costs and potential payoffs — offers important insight into both the current state of India-US trade talks and the broader competitive dynamics shaping global manufacturing and export flows in the current environment.
WHY RELATIVE POSITIONING MATTERS SO MUCH IN GLOBAL TRADE
To understand why India's negotiators have prioritised comparative advantage over simple parity, it helps to appreciate how global sourcing and manufacturing decisions actually get made by the multinational buyers, retailers, and brands that constitute the ultimate demand for exports from countries like India, Vietnam, and Bangladesh. When a global apparel retailer, electronics brand, or industrial goods buyer is deciding where to source production, tariff rates into their key end markets — overwhelmingly the United States and European Union for many product categories — represent one of the most significant, quantifiable variables in their total landed cost calculation, alongside labour costs, logistics expenses, and production quality and reliability considerations.
If two countries offer broadly comparable labour costs, manufacturing quality, and logistics infrastructure, but one faces a meaningfully higher tariff rate into the US market than the other, global buyers will, all else being equal, gravitate toward the lower-tariff option, since this directly and predictably affects their landed cost economics in a way that is often more immediately quantifiable than softer considerations like supply chain resilience or ethical sourcing credentials. This dynamic means that even a modest tariff differential between India and its key competing exporting nations can translate into meaningful shifts in sourcing decisions over time, as buyers recalibrate their supply chain allocation in response to relative cost advantages between competing origin countries.
Given this dynamic, simply matching whatever tariff terms Vietnam, Bangladesh, or other competing exporters have secured would, at best, preserve India's current competitive position relative to these rivals, without providing any meaningful improvement in India's ability to capture additional global sourcing demand that might otherwise flow to these competing nations. Securing genuinely more favourable terms, by contrast, would provide Indian exporters with a tangible, quantifiable cost advantage capable of actively shifting global sourcing decisions in India's favour over time — a far more valuable strategic outcome, even if considerably harder to negotiate and secure.
THE SPECIFIC SECTORS WHERE THIS COMPETITION IS MOST INTENSE
While India's broader trade relationship with the United States spans numerous sectors, the competitive dynamic with ASEAN exporters that Minister Goyal's negotiating strategy is most directly focused on addressing is particularly pronounced in labour-intensive manufacturing categories, most notably textiles and apparel, where India, Vietnam, and Bangladesh compete directly and intensely for the same pool of global sourcing demand from major American and European apparel retailers and brands.
India's textile and apparel export sector, despite the country's deep historical strength in textile manufacturing and its enormous, skilled labour force in this industry, has in recent years lost meaningful global market share to these competing Asian manufacturing hubs, a trend that industry bodies have consistently attributed, at least in part, to more favourable tariff and trade preference arrangements that Vietnam and Bangladesh have historically enjoyed in key export markets, including preferential access arrangements that have, at various points, given these competing nations a structural cost advantage over Indian exporters in the eyes of global apparel buyers making sourcing decisions.
Beyond textiles, similar competitive dynamics play out, albeit with somewhat different specific considerations, across other labour-intensive manufacturing categories including footwear, certain categories of consumer electronics assembly, and various other light manufacturing sectors where India competes for global sourcing demand against not just Vietnam and Bangladesh, but also other rising manufacturing hubs across South and Southeast Asia that have, in recent years, benefited from the broader global trend of companies diversifying their manufacturing base away from an overwhelming historical concentration in China.
THE COST OF HOLDING OUT FOR A BETTER DEAL
This ambitious negotiating strategy, however strategically sound in principle, carries genuine near-term costs that Indian exporters are currently absorbing while the broader negotiation remains unresolved. With the temporary tariff arrangement having lapsed and been replaced by a fresh 10 per cent duty on a range of Indian exports not specifically exempted, Indian textile and apparel exporters, among others, are currently competing for global sourcing demand under less favourable terms than they might eventually secure once — or if — a comprehensive agreement delivering genuinely superior competitive positioning relative to ASEAN peers is eventually finalised.
This creates a real, quantifiable tension within India's own negotiating strategy: every additional week or month spent holding out for better terms represents a period during which Indian exporters continue operating at a competitive disadvantage relative to rivals who may have already secured more favourable, settled tariff arrangements with the United States, potentially resulting in lost order volume and market share that may prove difficult to recapture even once India's own more favourable terms are eventually secured, given how sticky and relationship-dependent global sourcing decisions often prove to be once buyers have established supply relationships with alternative manufacturing hubs.
Industry bodies representing India's textile and apparel exporters have, according to various accounts, expressed this tension directly to trade negotiators, acknowledging the strategic logic of holding out for superior terms while also emphasising the very real, accumulating cost of continued delay to their members' near-term competitiveness and order books.
WHY INDIA BELIEVES THIS STRATEGY WILL ULTIMATELY PAY OFF
Despite these near-term costs, Indian trade negotiators appear to be betting that the long-term payoff from securing genuinely superior tariff terms — rather than simply matching competitors — justifies the near-term competitive disadvantage exporters are currently absorbing. This calculation rests on several underlying assumptions about India's broader strategic position in ongoing global supply chain diversification trends.
India's negotiators have consistently emphasised the country's scale advantages — its large, growing domestic market, its expanding manufacturing base across multiple sectors beyond just labour-intensive light manufacturing, and its deepening technology and services sector capabilities — as providing genuine leverage in trade negotiations that smaller exporting nations like Vietnam and Bangladesh may not possess to the same degree. This leverage, the thinking goes, should allow India to hold out for more favourable terms without facing the same pressure to accept less advantageous arrangements simply to secure any deal at all, a pressure that smaller, more trade-dependent economies might face more acutely.
Additionally, India's broader strategic relationship with the United States — encompassing defence cooperation, technology partnerships, and shared geopolitical interests around supply chain diversification away from overwhelming dependence on any single manufacturing hub — provides a broader diplomatic context that Indian negotiators appear to believe supports their case for securing terms that reflect this deeper strategic partnership, rather than treating the trade negotiation purely as a transactional exercise disconnected from this broader bilateral relationship.
WHAT SUCCESS WOULD ACTUALLY LOOK LIKE
If India's negotiating strategy succeeds in securing genuinely superior tariff terms relative to Vietnam, Bangladesh, and other competing Asian exporters, the practical implications for India's export economy could be substantial. Textile and apparel exporters, along with manufacturers across other labour-intensive sectors currently competing against these rival nations, would gain a tangible, quantifiable cost advantage capable of supporting both the recapture of previously lost market share and the capture of incremental new sourcing demand as global buyers continue diversifying supply chains in response to ongoing geopolitical and trade policy uncertainty affecting global manufacturing more broadly.
This kind of structural competitive advantage, if secured and sustained over time, could meaningfully accelerate India's broader ambitions to expand its share of global manufacturing and export activity, an objective that sits at the heart of numerous government policy initiatives, including production-linked incentive schemes and broader ease-of-doing-business reforms aimed at positioning India as an increasingly attractive alternative to China and other established manufacturing hubs for companies seeking to diversify their global supply chains.
THE RISK IF THE STRATEGY DOESN'T PAY OFF
Conversely, should this ambitious negotiating strategy fail to deliver the superior terms India is seeking — whether because the United States proves unwilling to offer meaningfully better arrangements than it has extended to competing Asian nations, or because the negotiation simply continues dragging on for an extended period without resolution — India risks a scenario in which its exporters have absorbed significant near-term competitive disadvantage and lost market share to rivals, without ultimately securing the kind of durable, superior competitive positioning that would justify this strategic patience in hindsight.
This risk underscores why the ongoing "last one per cent" characterisation of the talks, and the genuine uncertainty about how much longer the negotiation might continue, matters so significantly beyond the immediate diplomatic optics — the eventual outcome of this negotiation will determine whether India's patient, advantage-seeking negotiating strategy proves to be a shrewd long-term bet that pays substantial dividends, or a costly miscalculation that allowed competing nations to consolidate gains in global sourcing demand that India might otherwise have captured through a faster, if less ambitious, negotiating approach.
HOW OTHER EXPORTING NATIONS ARE RESPONDING
India's negotiating stance has not gone unnoticed by the very competitors it is attempting to outmanoeuvre. Trade officials and industry bodies in Vietnam and Bangladesh have, according to various trade press accounts, been closely monitoring the India-US negotiation, aware that any outcome granting India meaningfully superior terms could directly threaten their own hard-won position within global apparel and light manufacturing supply chains. Some reports suggest that these competing nations have themselves sought to reinforce or lock in their existing preferential arrangements with Washington, precisely to insulate themselves against the risk that a more favourable India deal could erode their current competitive advantages.
This dynamic illustrates how interconnected global trade negotiations have become in an era of active supply chain diversification — no major exporting nation can negotiate its own trade terms in isolation, without considering how the outcome might shift competitive dynamics across the entire network of alternative manufacturing hubs competing for the same pool of global sourcing demand. India's negotiators, in pursuing genuinely superior rather than merely comparable terms, are effectively wagering that Washington sees sufficient strategic value in the broader India relationship to grant this kind of competitive edge, even at the cost of some friction with other trading partners who might view preferential treatment for India as disadvantaging their own established trade relationships with the United States.
WHAT INDIAN EXPORTERS ARE DOING IN THE MEANTIME
While the broader negotiation continues, Indian exporters are not simply waiting passively for its eventual resolution. Industry bodies have been actively encouraging member companies to diversify their own export market exposure beyond the United States, exploring growth opportunities in the European Union, Gulf Cooperation Council countries, and other emerging markets where trade terms may be more immediately favourable or where India already enjoys established trade agreements offering more certainty than the current India-US negotiation provides. This diversification strategy, while not a complete substitute for the scale and purchasing power of the US market, offers exporters a degree of insulation against the risk that the current negotiation continues for an extended period without resolution, or ultimately fails to deliver the competitive advantage India's negotiators are seeking.
For now, that combination — patient, ambitious negotiation at the government level, paired with active market diversification at the industry level — represents India's twin-track approach to navigating a trade relationship whose ultimate terms remain, for the moment, still very much a work in progress — one negotiating round, one tariff announcement, and one export order at a time.
