A laboratory technician works on production of Remdesivir, a drug used in the treatment of the coronavirus disease (COVID-19), at Eva Pharma facility in Cairo, Egypt June 1, 2021. Picture taken June 1, 2021.REUTERS/Mohamed Abd El Ghany
Credit: Reuters Photo
Bengaluru: The decision by the United States to slap a 25% tariff on India has raised concerns among Indian exporters, who fear this could significantly disrupt bilateral trade flows. The new tariff structure is likely to have immediate ramifications for India’s major export sectors including pharmaceuticals.
Even though the pharmaceuticals sector is exempted from this tariff, there’s an ongoing uncertainty with the Trump administration’s policies. India being one of the largest exporters of generic drugs to the US, if similar tariffs are applied, it could have serious consequences to both the markets.
India has long been a cornerstone of the global supply chain for affordable, high-quality medicines, particularly in the generic drug market, where it supplies nearly 47% of the US's pharmaceutical needs. India’s pharmaceutical exports to the US stood at $11 billion in FY25, about 35% of the total exports.
“Indian pharmaceutical companies play a vital role in ensuring the affordability and availability of essential medications, including life-saving oncology drugs, antibiotics, and chronic disease treatments. Any disruption to this supply chain will inevitably lead to shortages and escalating prices, ultimately harming US consumers and healthcare systems,” according to pharma industry body Pharmexcil.
While the immediate consequences of these tariffs will likely result in increased costs for essential drugs, the long-term impact will be even more severe. The US market, heavily reliant on India for Active Pharmaceutical Ingredients (APIs) and low cost generics, faces a daunting challenge in finding alternative sources that can match the scale, quality, and affordability that India offers. Moreover, efforts to transition pharmaceutical manufacturing and API production to other countries or domestic sources in the US are projected to take several years, at a minimum of 3-5 years, before meaningful capacity can be established.
“Pharmexcil remains committed to advocating for the interests of Indian pharmaceutical exporters and the global healthcare community. We continue to engage with policymakers to emphasize the importance of affordable access to medicines and the indispensable role Indian pharmaceutical companies play in meeting the growing global demand for essential drugs”, Pharmexcil said.
While sectors like pharmaceuticals and phones are briefly exempt, the risk of eventual inclusion hangs over them, keeping companies nervous. Wider implications are set to ripple through to the stock market, forex and overall investor sentiment. Although certain IT and chemical companies stand to gain from trade diversion from China, the overall effect is negative, with supply chain realignment risks and slowed growth in export-reliant industries, said Hari Kiran Chereddi, Managing Director & CEO, HRV Global Life Sciences & New Horizon Global Pharma said.