US tariffs leave Indian pharma unaffected, industry voices relief

U.S. President Donald Trump announced new tariffs on April 2, 2025, as part of his “Liberation Day” economic plan. The tariffs include a 26 per cent reciprocal duty on Indian imports. However, the pharmaceutical sector remains exempt, bringing relief to the industry for now. 

Prior to the announcement, concerns had emerged within the pharma and healthcare industry after the Trump administration announced on Feb 13, 2025 that it will introduce reciprocal tariffs on all countries that impose duties on US goods. For instance, a report by the Global Trade Research Initiative (GTRI), a research Group focused on Climate Change, technology and trade, founded by Ajay Srivastava – Indian Trade Service officer, had highlighted that if the US raises tariffs on countries with a trade surplus, it could significantly affect Indian exports. The GTRI had also identified heavy potential impacts on the pharmaceutical, jewellery, and electronics sectors. 

With the pharma sector now exempt from the tariffs, industry experts weigh in their insights on the impact of this decision: 

The Indian Pharmaceutical Alliance (IPA) acknowledged the decision, emphasising the importance of the India-U.S. trade relationship. Sudarshan Jain, Secretary General of IPA stated:

“India and the U.S. share a strong and growing bilateral trade relationship, with a shared vision to double trade to $500 billion under the Mission 500 initiative. Pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and U.S. healthcare by ensuring a steady supply of affordable medicines.

Pharmaceuticals have been exempted from tariffs. The decision underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security. 

The Indian pharmaceutical industry is committed to advancing the shared priorities of both nations: strengthening medicine supply chain resilience and reinforcing national security by ensuring access to affordable medicines for all.”

Chakravarthi AVPS, Senior Vice President (National) and Chairman of AP & Telangana, Federation of Pharma Entrepreneurs (FOPE):

“I see President Trump’s new tariffs as a mixed outcome for India. While most Indian exports now face a 26 per cent tariff, there is major relief for the pharmaceutical sector, which remains exempt from these tariffs for now.

India is a key player in global healthcare, supplying 47 per cent of the U.S. generic drug market. The Indian Commerce Ministry, under honorable minister Shri Piyush Goyal, played a crucial role in securing this exemption through proactive engagement and diplomatic talks. Their efforts helped prevent a higher 25 per cent duty on pharma exports, ensuring that Indian generics remain affordable in the U.S.—a win for both economies.

Continued 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.”

Bhavin Mukund Mehta, Vice-Chairman – Pharmexcil, Whole-Time Director, Kilitch Drugs: 

“As India evaluates the impact of reduced tariffs, we recognise the pharmaceutical sector as the clear winner. With India importing $800 million worth of pharmaceutical products from the U.S. and exporting $8.7 billion, the strong trade ties between the two countries create a powerful win-win scenario. This shift drives significant cost savings on life-saving medicines and also positions Indian exporters to gain a competitive edge over their Asian counterparts, further strengthening India’s leadership in the global pharmaceutical market.”

Saurabh Agarwal, Tax partner, EY India:

“India’s pharmaceutical sector enjoys protection from reciprocal tariffs, keeping it insulated from tariff increase. Additionally, Indian goods face significantly lower tariffs in the US compared to those from China and Vietnam (additional difference arising on account of reciprocal tariffs released being 7 per cent and 19 per cent less, respectively), creating possibility of  growth potential for India’s telecommunication and textile manufacturing sectors. While 18 per cent of India’s total exports are destined for the US, anticipated supply chain shifts are expected to open new export opportunities. Although short-term export fluctuations may occur, the mid-to-long term outlook suggests possible export growth for India (contingent on final international trade negotiations with the US). To fully leverage this potential, the Indian government should expand existing Production Linked Incentive (PLI) schemes in these sectors to cover a wider range of products and extend their duration by two years, thereby bolstering domestic industries’ investment and global competitiveness.”