Indian pharma seeks generics exemption as US tariff deadline nears

New Delhi: The countdown has begun. With the US administration signalling its intent to impose tariffs on pharmaceutical imports, Indian drugmakers are bracing for a high-stakes negotiation.

The sector, which supplies a significant chunk of America's generic medicines, is expected to argue for a continued exemption at the next round of trade talks. The stakes are immense, given that Indian generics account for nearly 40% of the US market by volume.

Trade talks on the horizon

According to a report by The Economist, Indian pharmaceutical companies are preparing to make their case before US trade officials. The central demand, sources indicate, will be to keep generics out of any new tariff regime.

This is not a new ask. New Delhi has long maintained that generic medicines are a public health necessity, not just a commercial commodity. But the current US administration, under pressure to revive domestic manufacturing, appears less receptive to such arguments.

The US Customs and Border Protection (CBP) has already outlined potential rates and classifications for pharmaceutical tariffs, according to a Law360 report. That has set off alarm bells across the sector.

No rush to shift base

Despite the tariff threat, Indian drugmakers are in no hurry to relocate production to the US. A Business Standard report suggests that most companies are adopting a wait-and-watch approach.

Setting up US manufacturing plants is capital-intensive and time-consuming. For many Indian firms, the cost of shifting production would far outweigh the tariff burden, at least in the short term.

Industry experts point out that the US lacks the supply chain ecosystem that India has built over decades, particularly for active pharmaceutical ingredients (APIs). Even if tariffs are imposed, Indian firms may find it cheaper to pay the duty than to rebuild their entire manufacturing footprint overseas.

What the microcap angle reveals

A Yahoo Finance report highlights that possible generic drug tariffs could affect even small-cap and microcap pharmaceutical companies. These firms, often reliant on a handful of US-approved products, are particularly vulnerable.

For them, a tariff could mean thinner margins or loss of price competitiveness. Yet, even these smaller players are not rushing to shift operations. The cost and regulatory hurdles of US manufacturing remain prohibitive.

The consensus, for now, seems to be that the tariff threat is more of a negotiating tool than an imminent reality. But that assumption could change quickly if the US follows through on its stated intentions.

What happens next

The upcoming trade talks will be crucial. Indian negotiators are expected to press for a phased approach, seeking exemptions for essential generics while offering concessions in other areas.

There is also speculation that the US may target specific drug categories first, rather than imposing a blanket tariff on all pharmaceuticals. That could give Indian firms some breathing room to adapt.

For now, the sector watches the calendar. The tariff countdown has begun, and the next few months will determine whether Indian generics retain their duty-free access to the world's largest pharmaceutical market.