US Tariff India: Trump's tariffs can have a serious impact on the Indian pharmaceutical industry

US Tariff India: The US government's decision to raise tariffs on Indian pharma imports could have a profound impact on the Indian pharmaceutical industry. The move will increase the production costs of Indian drugmakers, making their products less competitive in the global market. Companies, especially those that operate on low margins, may be forced to consolidate or shut down their businesses due to this pressure. On the other hand, it will have relatively less impact on the auto sector, as the US is not a major export market for this industry.

India-US Trade and Tariff Policy

India currently levies about 10% import duty on US drugs, while the US did not impose any import duty on Indian drugs. US President Donald Trump described India as a "very high tariff country" and said that countries that impose tariffs on US products will be subjected to retaliatory tariffs by the US, which will come into effect from April 2. This policy could prove to be challenging for the Indian pharma industry.

Strong presence of Indian drugs in the US

Indian pharmaceutical companies have a strong hold in the US market. In 2022, Indian companies supplied medicines for 40% of the prescriptions written by doctors in the US. According to industry data, the US healthcare system saved $219 billion in 2022 due to Indian pharmaceutical companies. The savings reached a total of $1,300 billion from 2013 to 2022, and similar savings are expected in the next five years. This shows that the Indian pharma industry is a vital component of the US healthcare system.

Indian exports and impact of US tariffs

The total exports of the Indian pharmaceutical industry are highly dependent on the US, with about one-third of exports going to the US market alone. Experts believe that the new tariffs may increase US domestic healthcare costs, causing consumers to pay more and affecting access to medicines.

Limited impact on automobile sector

The impact of the US tariff hike on the Indian automobile sector is expected to be minimal. According to Shashi Mathews, partner at IndusLaw, the Indian auto sector has limited exposure to the US market. Although there may be some impact on the auto components market, it will not be enough to impact the entire industry. According to Mathews, the Indian government is unlikely to reduce tariffs to zero levels.

Conclusion

The US raising tariffs on Indian pharma products will have a direct impact on Indian pharmaceutical companies, which will affect their competitiveness and many companies may face difficulties. However, the automobile sector will be relatively less affected by this policy. This change in trade relations between India and the US will impact the economy and consumers of both countries, requiring the healthcare and pharmaceutical industry to take new strategic decisions.