On March 9, the increased import duties on pharma products in the US may have a serious impact on Indian drug manufacturers as it will raise their production costs, making their exports less competitive compared to products from other countries.

Small drug companies that operate on low margins may face severe pressure, forcing them to merge or shut down their businesses. On the other hand, the vehicle sector is expected to be affected less, as the US is a smaller export market for Indian vehicles.

US President Donald Trump, referring to India as a country with high tariffs, stated that retaliatory tariffs on countries imposing tariffs on US goods will be implemented from April 2. Currently, India imposes an import duty of about 10% on US drugs, while the US does not impose any import duties on Indian drugs.

He added, “If the US decides to impose heavy tariffs on drug imports from India, it will have a clear impact on the Indian pharmaceutical sector and disrupt domestic consumption as well.”

A large portion of the drug supply in the US is provided by Indian pharmaceutical companies. In 2022, Indian companies supplied drugs for 40% of the prescriptions written by doctors in the US, i.e., 4 out of 10 prescriptions.

According to industry sources, overall, Indian companies' drugs saved the US healthcare system $219 billion in 2022, and a total of $1,300 billion between 2013 and 2022. It is expected that Indian generic drugs will save an additional $1,300 billion over the next five years.

Sharma stated that India's pharmaceutical industry is heavily dependent on the US market, with the US accounting for nearly one-third of its total exports. While the Indian market may be well-protected and subject to heavy taxation, retaliatory tariffs for US imports, which constitute a smaller export market for the Indian automotive sector, will not impact us much.