Last Updated on April 9, 2025 by The Health Master
Indian Pharma
New Delhi, India: In a welcome development for the Indian pharmaceutical sector, intense lobbying efforts have yielded a temporary reprieve from the reciprocal tariffs recently announced by the new US administration.
An executive order issued by the White House has confirmed that pharmaceuticals will be excluded from the initial wave of these tariffs, offering a moment of relief to an industry that plays a crucial role in global healthcare.
Temporary Relief
This decision comes after significant discussions and high-level engagement between the pharma industry and policymakers. The exclusion, while positive, comes with a caveat.
A fact sheet released by the White House explicitly states that pharmaceuticals, despite being exempt from the current reciprocal tariff plans, “may become subject to future Section 232 tariffs.”
This leaves the industry in a state of cautious optimism, aware that the threat of tariffs hasn’t entirely disappeared.
Understanding the Section 232 Tariffs
Section 232 of the Trade Expansion Act of 1962 is a critical piece of legislation that could potentially impact the pharma sector down the line.
This act empowers the US Secretary of Commerce to investigate the impact of imports on US national security.
The investigation assesses how foreign competition affects domestic industries and whether excessive imports displace domestic products, leading to job losses, decreased investment, and reduced government revenue.
If the Secretary’s report concludes that imports pose a threat to national security, the President is authorized to adjust imports, including imposing tariffs.
What Industry Experts say
Arvind Sharma, a partner at Shardul Amarchand Mangaldas & Co, a legal firm advising numerous pharmaceutical companies, commented on this development.
He acknowledged the immediate relief for the Indian pharma sector but cautioned that the industry remains under scrutiny for potential future tariffs by the Trump administration.
Sharma highlighted that Section 232 could present “significant challenges,” potentially leading to pharmaceutical imports being evaluated not just economically but also strategically.
He advised Indian pharmaceutical companies to proactively monitor the situation and engage with policymakers to emphasize the security of their supply chains, their adherence to quality standards, and the strategic importance of maintaining diverse and reliable sources for essential and generic medicines.
Indian Industry Bodies See a Silver Lining
Echoing a positive sentiment, Bhavin Mukund Mehta, Vice-Chairman of Pharmexcil, an Indian government-backed export promotion body, hailed the decision as a clear win for the pharmaceutical sector.
He stated that this shift would lead to “significant cost savings on life-saving medicines” and position Indian exporters to gain a competitive advantage over their Asian counterparts, further solidifying India’s position as a leader in the global pharmaceutical market.
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), a domestic industry body, also welcomed the news.
He emphasized that “the exemption of pharmaceuticals from tariffs underscores the critical role of cost-effective, life-saving generic medicines in public health, economic stability, and national security.”
The Significance of the US Market for Indian Pharma
Data from the Indian Ministry of Commerce and Industry reveals the significant reliance of the Indian pharmaceutical industry on the US market.
In FY23-24, India exported pharmaceutical goods worth a substantial $8.72 billion (approximately ₹75,000 crore) to the United States.
Current Tariff Landscape: India and the US
Currently, Indian pharma exports to the US are not subject to tariffs.
Conversely, India imposes a basic customs duty of 10% on most drug imports, with some life-saving drugs and vaccines attracting a concessional rate of 5% or even nil.
US Concerns Regarding Indian Import Duties
Despite the current exemption, a recent report from the United States Trade Representative (USTR), which oversees US international trade policy, has pointed out that “India maintains very high basic customs duties (in some cases exceeding 20 percent) on drug formulations, including life-saving drugs and finished medicines listed on the World Health Organization’s list of essential medicines.”
This suggests that while the US has temporarily refrained from imposing tariffs, concerns about India’s existing duties persist.
Key Figures – India’s Pharma Exports to the US (FY23-24)
| Metric | Value |
|---|---|
| Export Value (USD) | $8.72 Billion |
| Export Value (INR) | ₹75,000 Crore |
What are reciprocal tariffs?
Reciprocal tariffs are tariffs imposed by one country in response to tariffs imposed by another country on its goods.
What are Section 232 tariffs?
Section 232 tariffs are tariffs imposed by the US on imported goods if the Secretary of Commerce determines that the imports threaten US national security.
What is the significance of the US market for the Indian pharmaceutical industry?
The US is a major export destination for Indian pharmaceuticals, accounting for billions of dollars in exports annually.
What are India’s current import duties on pharmaceuticals?
India currently imposes a basic customs duty of 10% on most drug imports, with some exceptions for life-saving drugs and vaccines.
What is India’s stance on free trade agreements?
India is actively pursuing free trade agreements to reduce or eliminate tariffs and non-tariff barriers on international trade.
Disclaimer: This article contains information obtained from the source mentioned below. Our team made changes in the format to rewrite and present the news or article in a unique format.
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