With the US government’s decision to exclude pharmaceutical sector from the reciprocal tariff move, the industry has called it a “win-win scenario” for both countries. Experts said that this will help in keeping the healthcare cost low for the US consumers, and also continue to benefit domestic pharma companies who count US as their biggest exports market with an annual billing of $8.7 billion.
Viranchi Shah, national spokesperson for Indian Drug Manufacturers’ Association (IDMA) said that India plays a critical role in the overall healthcare cost in the US. For instance, India accounts for just 6% of the total pharma imports in the US but caters nearly 47% of the generics market. “Indian contributes to accessibility and affordability of medicines globally, including US,” he said.
Another pharma association head said that the decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security. “India and the US share a strong and growing bilateral trade relationship with a shared vision to double trade to $500 billion under the Mission 500 initiative. The Indian pharma industry is committed to advancing the shared priorities of both nations which includes strengthening medicine supply chain resilience and reinforcing national security by ensuring access to affordable medicines for all,” said Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance (IPA).
Currently, exports of Indian drugs to the US attract zero tariffs, while the Indian tariffs range from zero to 7.5%, with most products attracting either nil or minimal levies. India has been gradually lowering the customs duties on life-saving medicines to bring down the cost of expensive therapies for Indian consumers. For instance, in the last union budget, the government proposed basic customs duty (BCD) exemption on 36 life-saving drugs and medicines and concessional customs duty of 5% for six more medicines.
“As India evaluates the impact of reduced tariffs, we recognise the pharmaceutical sector as the clear winner. The strong trade ties between the two countries create a powerful win-win scenario. This shift positions Indian exporters to gain a competitive edge over their Asian counterparts further strengthening India’s leadership in the global pharmaceutical market,” said Bhavin Mukund Mehta, vice-Chairman of Pharmexcil.
Meanwhile, the imposition of a 27% reciprocal tariff on Indian medical device exports to the US may pose a significant challenge to the sector’s growth. “Historically, India has been a key supplier of cost-effective, high-quality medical devices to the US, primarily in low-value high volume consumables categories. However, this new tariff may possibly impact the exports, and we have to explore windows of opportunities where US has been seeking to diversify its supply chain dependence on any one nation,” said Rajiv Nath, forum coordinator at Association of Indian Medical Device Industry (AiMeD).
Though some experts said that devices maker might gain a marginal price advantage over China (8%) in certain low-risk, high-volume consumables.