**Washington**: The Trump administration’s recent decision to exempt the Indian pharmaceutical sector from reciprocal tariffs highlights the importance of affordable medications in trade relations, with industry leaders emphasising the value of India’s generics supply in the US healthcare system and potential future trade dynamics.
The Trump administration has made a significant announcement regarding the Indian pharmaceutical sector, exempting it from reciprocal tariffs that were introduced in response to global trade tensions. This decision comes as part of a broader strategy to impose reciprocal tariffs on approximately 60 countries, which President Donald Trump revealed on Wednesday. He explicitly pointed out that India has imposed high import duties on American goods, leading to the establishment of a 27 per cent reciprocal tariff on various products imported from India.
Despite the imposition of these tariffs, pharmaceuticals and other essential items have been specifically excluded from the increased import duties. This move has been met with approval from industry experts, who highlight the essential role that India’s pharmaceutical industry plays in providing affordable medications, both domestically and internationally, particularly in the United States.
Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), commented on the importance of this decision, stating that it highlights the critical role of cost-effective, life-saving generic medicines in the health sector, economic stability, and national security. He noted that the United States and India maintain a strong and increasingly robust bilateral trade relationship, with aspirations to double trade to USD 500 billion under the Mission 500 initiative. Jain underscored the United States’ reliance on India for a consistent supply of affordable medications, asserting that this factor is central to the partnership between the two nations.
The Indian pharmaceutical sector is comprised of numerous leading companies, including Sun Pharma, Dr Reddy’s Laboratories, Lupin, Torrent, and Glenmark, which together form the IPA’s network. Indian pharmaceutical companies are responsible for servicing a significant portion of the US market, with reports indicating that four out of ten prescriptions filled in the US in 2022 were supplied by Indian sources. Estimates indicate that medicines provided by these companies generated USD 219 billion in savings for the US healthcare system in 2022 alone, amassing a total savings of USD 1.3 trillion from 2013 through 2022. Projections suggest that generic drugs from India are set to create an additional USD 1.3 trillion in savings over the next five years.
According to Bhavin Mukund Mehta, Vice-Chairman of Pharmexcil, the exempt status of the pharmaceutical sector places it in a advantageous position. Mehta noted, “With India importing USD 800 million worth of pharmaceutical products from the US and exporting USD 8.7 billion, the strong trade ties between the two countries create a powerful win-win scenario.” He highlighted that this exemption fosters cost savings on essential medications and enhances India’s competitive position in the global pharmaceutical market, particularly against other Asian countries.
Furthermore, Sheetal Arora, Promoter and CEO of Mankind Pharma, explained that this exemption represents not just a tactical advantage but also recognises the critical dependencies in healthcare. He emphasised the importance of India’s extensive generic manufacturing capabilities, stating that any disruption in this supply chain could have severe implications for patient care in the US. Arora highlighted the strategic opportunity presented to India, advocating for a focus on next-generation generics and bolstering domestic active pharmaceutical ingredient (API) production to minimise geopolitical vulnerabilities.
The pharmaceutical industry stands as India’s largest industrial export, valued at an estimated USD 12.72 billion for the year 2024. However, concerns remain regarding potential future scrutiny under Section 232 of the Trade Expansion Act of 1962, which could pose challenges for the industry. Arvind Sharma, a partner at Shardul Amarchand Mangaldas & Co, noted that while pharmaceuticals are currently exempt from new tariffs, any evaluation under Section 232 may consider factors beyond economics, particularly national security concerns.
Medical Technology Association of India Chairman Pavan Choudary reflected that this decision ensures the uninterrupted flow of affordable, high-quality medicines from India to the US, reinforcing the ongoing healthcare partnership between the two countries. As the landscape of international trade continues to evolve, the implications of this exemption will likely play a critical role in shaping the future of the Indian pharmaceutical sector and its partnership with the United States.
Source: Noah Wire Services
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