Whalesbook
New Delhi: Indian corporations committed a record $20.5 billion in US investments at the 2026 SelectUSA Investment Summit, signaling deeper economic ties with the United States. While this announcement highlights India's growing global investment power, it is heavily focused on the pharmaceutical sector, driven by Sun Pharmaceutical Industries' $11.75 billion acquisition of US-based Organon & Co. This major move aims to expand global reach while addressing competitive pressures in the US market.
Pharma Sector Leads Investments
The pharmaceutical sector accounted for more than $19.1 billion of the total commitments. Sun Pharma's purchase of Organon, a leader in women's health and biosimilars, is a significant step. This acquisition aims to make Sun Pharma one of the top 25 global pharmaceutical companies, with projected revenues of $12.4 billion. The goal is to strengthen its innovative medicines business and counter challenges in the US generics market, which faces ongoing price drops and tough competition. The $11.75 billion deal is expected to close by early 2027, pending regulatory approval, and is funded by cash and financing. Credit rating agencies CRISIL and ICRA are reviewing Sun Pharma's top 'AAA' rating due to the acquisition's size and potential debt.
Zydus Lifesciences is also expanding, acquiring US-based Assertio Holdings for $166.4 million to boost its specialty and oncology business. Jubilant Pharmova plans to invest $300 million by FY28 to double its sterile injectable capacity in the US, targeting niche markets and protecting its profit margins.
Other Sectors Face Challenges
Outside of pharmaceuticals, other sectors are also investing, but with mixed results. JSW Steel plans $255 million in modernization projects in Ohio and Texas. However, the company faces rising material costs, strong competition, mixed analyst views, and an antitrust investigation into alleged price fixing.
Sterlite Technologies (STL) is aiming to supply advanced optical fiber for data centers to meet AI demand. While its stock has risen due to high-bandwidth needs, STL faces challenges like high valuations, significant debt, and weak interest coverage. Its growth also depends heavily on the spending of large tech companies (hyperscalers).
Investments in clean energy manufacturing, supported by US policies like the CHIPS Act and the Inflation Reduction Act, are becoming complicated. China leads global clean energy manufacturing investment. The US depends on foreign investment for its manufacturing and has seen policy shifts affect battery manufacturing.
Trade Deals and Global Risks
These large Indian investments come as the India-US trade relationship is being reshaped. After the US imposed up to 50% tariffs on Indian goods in August 2025, causing a trade drop, a new agreement effective February 7, 2026, reduced US tariffs on Indian products to 18%. This helps restore India's export competitiveness, especially in textiles, pharmaceuticals, and chemicals. However, some competitors still benefit from US trade preferences, reducing India's advantage.
US trade policies have historically affected India's export sectors and capital flows. The US using economic access as leverage poses geopolitical risks for India's export industries. While the recent trade deal provides a more stable tariff structure, cautiousness remains due to uncertainties and global economic volatility.
Navigating Investment Risks
Despite record investment figures, several risks loom. Sterlite Technologies faces high valuations and weak financial metrics compared to recent improvements. JSW Steel is pressured by rising costs, competition, and an antitrust probe. Sun Pharma's acquisition adds significant debt, drawing scrutiny from credit raters. Indian drugmakers also face US pricing pressures and FDA oversight. Furthermore, growth in sectors like semiconductors and clean energy manufacturing relies on US government incentives and policy certainty, creating regulatory risks for foreign investors. China's strong position in clean tech manufacturing also poses a significant competitive threat.
Overall, the record US investment from India shows a strategic effort by Indian firms to grow globally. However, the strong focus on pharmaceuticals, the link to trade deal changes, and differing industry challenges suggest that future success will depend on effective integration, managing global complexities, and adapting to US trade and industrial policies.