Report on US-India Trade Negotiations and Sustainable Development Goals (SDGs) Implications

The ongoing US-India trade negotiations, scheduled to conclude by July 9, 2025, represent a critical juncture for global supply chains and economic cooperation between the two nations. The potential expansion of bilateral trade to $128 billion through a phased agreement carries significant implications for sectors such as pharmaceuticals, automotive components, and IT services. This report emphasizes the alignment of these negotiations with the United Nations Sustainable Development Goals (SDGs), highlighting opportunities and challenges within the context of sustainable economic growth, innovation, and global partnerships.

Pharmaceuticals: Central to Trade and SDG 3 (Good Health and Well-being)

Trade Dynamics and Sectoral Impact

India’s pharmaceutical exports to the U.S., valued at $8 billion, constitute a cornerstone of the bilateral trade relationship. Indian generic drug manufacturers supply approximately 40% of the U.S. generic market. Tariff compromises could enable significant growth in this sector, fostering improved access to affordable medicines and supporting SDG 3 by promoting health and well-being globally.

Key Issues

• U.S. demands reduced tariffs to facilitate market access for biotech firms.
• India requires reciprocal tariff reductions to protect its $38 billion domestic pharmaceutical industry.

Investment Opportunities

• Companies such as Sun Pharmaceutical and Dr. Reddy’s Laboratories, with 35–40% revenue exposure to the U.S., are positioned to benefit from tariff reductions.
• Enhanced margins and increased R&D investments could accelerate innovation, supporting SDG 9 (Industry, Innovation, and Infrastructure).

Automotive Components: Navigating Trade Barriers and SDG 9 (Industry, Innovation, and Infrastructure)

Sector Challenges

India’s automotive sector faces a complex scenario, seeking greater access to the U.S. market while maintaining protection against U.S. automotive imports. Current tariffs include:

• Up to 50% on U.S. steel and aluminum imports.
• 25% on finished vehicles.

These tariffs protect domestic manufacturers such as Tata Motors and Ashok Leyland. However, U.S. demands for tariff reciprocity present negotiation challenges.

Strategic Alignment with SDGs

• A breakthrough could support India’s “Make in India” initiative, especially in electric vehicle (EV) components, advancing SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action) through sustainable transport solutions.
• Without U.S. concessions on steel tariffs, progress remains unlikely, potentially delaying sustainable industrial development.

Investment Caution

• Auto component stocks may underperform until tariff reciprocity issues are resolved.

IT Services and Technology: Enhancing Digital Infrastructure and SDG 8 (Decent Work and Economic Growth)

Trade Overview

The $33 billion IT services trade, led by Tata Consultancy Services (TCS) and Infosys, is less contentious but holds considerable expansion potential. The U.S. seeks enhanced market access for cloud and cybersecurity firms such as Microsoft and Amazon, while India aims to reduce barriers for its IT outsourcing sector.

SDG Contributions

• Acceleration of India’s digital infrastructure supports SDG 9 by fostering innovation and resilient infrastructure.
• Growth in IT services promotes decent work and economic growth (SDG 8) by creating employment opportunities and enhancing skills.

Investment Recommendations

• TCS and Infosys are well-positioned to capitalize on U.S. demand for cloud and AI services.

Defense and Geopolitical Risks: Addressing SDG 16 (Peace, Justice, and Strong Institutions)

Defense Collaboration

Potential joint manufacturing initiatives with companies like Boeing and Lockheed Martin could reduce India’s dependence on Russian and Chinese defense suppliers, enhancing strategic autonomy and regional stability.

Geopolitical Challenges

• China’s Retaliation: Possible non-tariff barriers on Indian exports and accelerated Chinese supply chain diversification may impact sectors such as textiles.
• Strategic Autonomy: India’s cautious stance on U.S. sanctions against Russia reflects its commitment to maintaining independent foreign policy decisions.

Strategic Investment Recommendations Aligned with SDGs

1. Prioritize US-Exposed Sectors: Focus on pharmaceuticals and IT services for near-term growth with lower geopolitical risk, supporting SDG 3, SDG 8, and SDG 9.
2. Exercise Caution in Automotive Investments: Await clarity on tariff reciprocity before increasing exposure to auto components, ensuring sustainable industrial development (SDG 9).
3. Enhance Supply Chain Resilience: Favor companies with diversified global operations and minimal reliance on sanctioned markets to mitigate risks and support SDG 17 (Partnerships for the Goals).

Conclusion and Outlook

The July 9, 2025 deadline is critical. Failure to reach an agreement could trigger 26% U.S. retaliatory tariffs, disrupting $87 billion in annual trade and impacting sustainable economic growth. Conversely, a successful deal could catalyze a multiyear bull market in Indian equities aligned with U.S. demand, fostering innovation, job creation, and stronger global partnerships consistent with the SDGs.

Final Note: Stakeholders should monitor the negotiation outcomes closely to strategically position investments that support sustainable development and long-term economic resilience.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 3: Good Health and Well-being
   • Related to pharmaceutical exports and generic drug manufacturing discussed in the article.
2. SDG 8: Decent Work and Economic Growth
   • Trade expansion, investment opportunities, and industrial growth in pharmaceuticals, automotive, and IT sectors.
3. SDG 9: Industry, Innovation, and Infrastructure
   • Focus on manufacturing, R&D investments, digital infrastructure growth, and technology services.
4. SDG 17: Partnerships for the Goals
   • Bilateral trade negotiations and defense collaboration between the US and India.
5. SDG 12: Responsible Consumption and Production
   • Supply chain resilience and diversification efforts implied in the article.

2. Specific Targets Under Those SDGs Identified

1. SDG 3: Good Health and Well-being
   • Target 3.8: Achieve universal health coverage, including access to quality essential medicines and vaccines.
2. SDG 8: Decent Work and Economic Growth
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • Target 8.3: Promote development-oriented policies that support productive activities and decent job creation.
3. SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.2: Promote inclusive and sustainable industrialization and raise industry’s share of employment and GDP.
   • Target 9.5: Enhance scientific research, upgrade technological capabilities, and encourage innovation.
4. SDG 12: Responsible Consumption and Production
   • Target 12.2: Achieve sustainable management and efficient use of natural resources.
   • Target 12.6: Encourage companies to adopt sustainable practices and integrate sustainability information into reporting cycles.
5. SDG 17: Partnerships for the Goals
   • Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the WTO.
   • Target 17.16: Enhance the global partnership for sustainable development.

3. Indicators Mentioned or Implied to Measure Progress

1. Trade Volume and Value
   • Indicator: Total bilateral trade value between the US and India (e.g., $128 billion projected trade).
   • Used to measure progress towards SDG 17 targets on trade partnerships and economic growth.
2. Pharmaceutical Export Share
   • Indicator: Percentage of Indian generic drugs in the U.S. market (40% share mentioned).
   • Reflects progress towards SDG 3 target on access to medicines.
3. Revenue Growth and R&D Investment
   • Indicator: Revenue percentages from U.S. markets for companies like Sun Pharmaceutical and Dr. Reddy’s (35-40%).
   • Indicator: Year-on-year revenue growth rates for IT companies like Infosys (data provided in article).
   • Measures progress towards SDG 8 and SDG 9 targets on economic growth and innovation.
4. Tariff Levels and Market Access
   • Indicator: Tariff rates on steel, aluminum, and vehicles (up to 50% and 25%).
   • Used to assess trade barriers impacting SDG 17 targets.
5. Supply Chain Diversification
   • Indicator: Degree of reliance on sanctioned or politically sensitive markets (implied in defense and geopolitical risks).
   • Relevant to SDG 12 and SDG 17 targets on sustainable production and partnerships.

4. Table of SDGs, Targets, and Indicators

Source: ainvest.com