The brief reprieve for Indian pharmaceutical stocks ended on Friday after U.S. President Donald Trump clarified that pharmaceutical products are being considered as a separate category and ‘unprecedented’ measures could be announced in near future. Trump’s position was not completely unexpected, say experts, as the April 2 announcement of the U.S President had cleared said that the products against which tariffs were not announced were being treated as a separate category under the “Section 232” of the Trade Expansion Act of that country.

“Section 232 of the Trade Expansion Act of 1962 enables the Government of USA, more particularly the President of USA, to take necessary action to restrict the import of items/articles that are deemed to threaten or impair the national security of USA. While pharmaceuticals are currently exempt from tariffs imposed by USA, potential future scrutiny under Section 232 could pose significant challenges for the sector”, Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co. Points out.

According to him, the concern is that since Section 232 primarily addresses national security concerns, pharmaceutical imports may be evaluated not just economically, but strategically. “Indian pharmaceutical companies should closely monitor developments and proactively engage with policymakers, where possible, to ensure transparency around supply chain security, quality standards, and the strategic importance of maintaining diverse, reliable sources of essential and generic medicines. Proactive preparedness and strategic dialogue will be key to mitigating risks associated with potential Section 232 actions”, he says.

Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA) said Indian pharmaceutical industry is committed to advancing the shared priorities of both nations: strengthening medicine supply chain resilience and reinforcing national security by ensuring access to affordable medicines for all.

“India and the U.S. share a strong and growing bilateral trade relationship, with a shared vision to double trade to $500 billion under the Mission 500 initiative. Pharmaceuticals remain a cornerstone of this partnership, as India plays a vital role in global and U.S. healthcare by ensuring a steady supply of affordable medicines”, Jain said.

The ongoing India-US Bilateral Trade Agreement (BTA) talks leave some hope to the industry as a decision that cushions the impact of any additional tariff measure Trump may impose on pharmaceutical products will be key to early conclusion of BTA negotiations.