New Trouble For India? Trump Says US Will Tariff Pharmaceutical Imports Soon

Continuing his economic onslaught, US President Donald Trump said on Tuesday that Washington is planning to announce a "major" tariff on pharmaceutical imports soon. India's pharmaceuticals sector, one of the most dependent domestic industries on trade with America, could be significantly impacted by the move.

Speaking at an event at the National Republican Congressional Committee, America's commander-in-chief said the tariff will incentivize drug companies to move their operations to the US. Previously, the Trump administration had kept pharmaceuticals and semiconductors away from the ambit of its reciprocal tariff policy.

How Could India Be Impacted? 

America is India's largest export market for pharmaceutical goods. In FY 24, of India's $27.9 billion worth of pharma exports, 31 per cent or $8.7 billion to the US, according to the Pharmaceuticals Export Promotion Council of India, an industry body.

Per reports, India supplies over 45 per cent of generic and 15 per cent of biosimilar drugs used in the US. Firms like Dr Reddy's, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma reportedly earn anywhere from 30-50 per cent of their total revenues from the American market.

India-US Both Will Be Impacted

Experts have warned that higher US tariffs on pharmaceutical imports could severely impact both Washington and New Delhi as they will raise production costs, eroding price competitiveness for manufacturers and higher prices for customers. 

"In case the US starts imposing tariffs on the pharma sector, it will impact both countries," the HDFC Securities analysts told financial daily Mint.

They explained that America depends on low-cost generics manufactured in India, and higher tariffs would lead to price hikes, inflation and drug shortages in the country. Meanwhile, Indian companies, operating on thin margins in the US generics space, may struggle to absorb costs and end up passing them on to US consumers or insurers.