US President Donald Trump’s decision to hike tariffs on Indian goods by another 25 per cent in addition to the existing 25 per cent duty rattled the government and industries here on Wednesday.
But, the President’s executive order exempted India’s pharmaceutical exports, at least for now. The sector is being reviewed, subject to the outcome of the investigation under Section 232 of the Trade Expansion Act of 1962.
India’s Pharmaceutical Export Promotion Council (Pharmexcil) said on Thursday that exempting drug formulations and active pharmaceutical ingredients (API) from tariffs reiterates that India manufactures low-cost essential generic drugs and any rise in their costs will ultimately burden the American consumers.
India supplies over 40 per cent of generic drugs used in the US, including treatments for chronic diseases, cancer, and infectious conditions.
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India plays a critical role in ensuring affordable medicines for the American population, said the pharma body, adding that replicating the country’s drug-manufacturing capabilities would take the US another 3-5 years at the very least, that too with significant challenges in achieving comparable scale, cost efficiency, and depth of talent.
"Tariffs on Indian pharma would be counterproductive, ultimately burdening American consumers. Indian companies manufacture low-cost generics – not high-margin products – so any tariff costs would pass directly to US consumers," said Namit Joshi, Chairman, Pharmexcil.
With over 700 US FDA-approved facilities and 12 per cent of industry earnings reinvested in compliance, India exports 55 per cent of its pharma products to tightly regulated markets like the US, UK and EU, a testament to its unmatched quality standards, Joshi said.
Indian Pharmaceutical Alliance (IPA) Secretary General, Sudarshan Jain, said generic medicines are important for affordable healthcare in the US and typically operate on razor-thin margins.
“Ensuring their consistent availability is critical for patient care. The India-US partnership is key to securing API supply chains and enhancing healthcare resilience,” he said.
India’s Economic Advisory Council to the Prime Minister (EAC-PM) member, Shamika Ravi, agreed that the burden of US tariff hikes will ultimately fall on low-income American households.
"Trump's tariffs are effectively a tax on cheap goods available from the global markets, the burden of which will fall on low-income American households.
"These tariffs are eventually a transfer from low-income American households to the US government," Ravi said in a social media post on X.
On August 1, Trump had signed an executive order titled, 'Further Modifying The Reciprocal Tariff Rates', raising tariffs for over five dozen countries, including a steep 25 per cent for India. On August 6, he added 25 per cent tariffs to this figure, taking the total to 50 per cent.
The executive order, however, did not mention the "penalty" that Trump had said India will have to pay because of its purchases of Russian military equipment and energy.
Critical of India and Russia’s “close ties”, Trump said the two countries can take their “dead economies down together”.
Declaring that the US has a massive trade deficit with India, Trump said the US had done “relatively little business” with India because “their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any country”.
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