Indian pharma has been exempted from tariffs
The US has exempted Indian pharmaceutical exports from new tariffs, ensuring continued access to affordable generic medicines, but uncertainty remains over future tariff changes.
04 Apr 2025 | By Prabhat Prakash
The US administration's decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security
Ever since United States President Donald Trump imposed reciprocal tariffs on almost all countries, including India (26%), reports seem to suggest that the pharma sector has been excluded from tariffs. Sources told WhatPackaging? that it is unclear whether this is a short-term or medium-term arrangement, but Indian pharma views this as a positive.
Sudarshan Jain, the secretary general of the Indian Pharmaceutical Alliance (IPA), said, "India and the US share a strong and growing bilateral trade relationship, with a shared vision to double trade to USD 500-billion under the Mission 500 initiative. Jain stated, "Pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and US healthcare by ensuring a steady supply of affordable medicines."
Meanwhile, India's medical device sector is facing the impact of the reciprocal tariff. Himanshu Baid, managing director of Poly Medicure, and Rajiv Nath, forum coordinator of Association of Indian Manufacturers of Medical Devices, issued a joint statement saying, "The 26% reciprocal tariff on Indian medical device exports to the US could significantly challenge the sector's growth."
Historically, India has been a key supplier of cost-effective, high-quality medical devices to the USA, primarily in low-value high-volume consumables categories. Nath said, "This new tariff may possibly impact Indian medical devices exports, and we have to explore windows of opportunities where the USA has been seeking to diversify its supply chain dependence on any one nation."
In 2023-24, India's medical device exports to the US stood at USD 714.38-million, while imports from the US to India were significantly higher at USD 1,519.94-million as per data shared by the Export Promotion Council of Medical Devices.
Meanwhile, Chakravarthi AVPS, senior vice president (national) and chairman of the Federation of Pharma Entrepreneurs (FOPE) for Andhra Pradesh and Telangana, told WhatPackaging?, "I see President Trump’s new tariffs as a mixed outcome for India. While most Indian exports now face a 26% tariff, there is major relief for the pharmaceutical sector, which remains exempt from these tariffs for now."
He said, "India is a key player in global healthcare, supplying 47% of the US generic drug market." Chakravarthi said, "Diplomatic efforts and strategic negotiations will be crucial in safeguarding India’s leadership in the global pharmaceutical market, highlighting our strength in delivering high-quality medicines at the most affordable prices.
Readers of WhatPackaging? are perhaps aware that the US imports USD 300-billion worth of pharma, medtech, and lifesciences products annually. Of this, India (largely generic players) accounts for USD 10-billion. The top four nation-states are Ireland, Germany, Switzerland, and Singapore which account for 45-50% of imports into the US. That said, India boasts hundreds of US Food and Drug Administration (FDA)-compliant factories and more than a thousand World Health Organisation (WHO)-Good Manufacturing Practice (GMP)-approved pharmaceutical plants.
The exemption is positive news for the pharmaceutical packaging industry, which ensures the uninterrupted supply of essential medicines and vaccines to the US. The Indian pharmaceutical industry remains committed to advancing the shared priorities of both nations: strengthening supply chain resilience and enhancing national security by ensuring access to affordable medicines for all.
What the pharma experts say
Kaushik Desai, pharma consultant: Sooner or later, there could be some increase in tariffs. The Indian pharmaceutical companies and their partners will have to strategise their business plans.
Although tariffs have risen to 26% in most sectors in India, pharmaceuticals have been exempted for the time being, with the exemption set to be reviewed under Section 232 of the United States' Trade Expansion Act of 1962. Europe, China, and Canada are the most affected.
The Indian pharmaceutical industry is relieved by the lack of immediate impact on their business plans. Several factors contributed to the exclusion of pharmaceuticals. India exports about 31% of total US pharmaceutical imports and is one of the largest exporters of generic medicines, supporting the US ecosystem in providing affordable medicines to American patients. The US pharmaceutical sector is primarily driven by the insurance industry, which has likely played a role, supported by patient groups, in influencing this decision. Additionally, any shortage of essential drugs would significantly impact the entire distribution system and could cause supply chain disruption.
The US pharmaceutical industry is not equipped with enough manufacturing capacity, and at the same time, it offers medicines at competitive rates offered by Indian pharmaceutical companies. The Indian government has taken proactive steps in initiating bilateral negotiations with US counterparts, which is expected to have a positive outcome during the year.
But there is always a hanging sword. Sooner or later, there could be some increase in tariffs. The Indian pharmaceutical companies and their partners will have to strategise their business plans. The dependency on generic business should be overcome by focusing on other new dosage forms and other drug delivery systems. Also, they would have to look for other countries for the sustainability of their business in the long term. There is enough time to plan our future course of action.
Sushil Suri, CMD at Morepen Labs: There is no immediate plan to cut exposure to the US since our facilities are approved by the USFDA, and it is not easy to find new FDA-approved facilities overnight.
Morepen has a very diversified business both in terms of products and by geographical distribution. Morepen exports to over 82 countries, and our exports to the US markets are only 6% of the company’s revenue, and we hope to increase them gradually.
India is the biggest generic supplier to the USA, and we stand strong to remain committed to its quality and prices.
There is no immediate plan to cut exposure to the US since our facilities are approved by the USFDA, and it is not easy to find new FDA-approved facilities overnight. We are giving very competitive prices to the US customers, and they will still be in a better position to buy from India even if they have to pay small tariffs in future.
The entry barrier is US FDA-approved plants. Either they buy from India or China. Europe is very costly.