Indian pharma sector seeks stronger US partnership as Trump proposes 100% extra tariff on generic drugs

In a move that will make Indian generic drug makers review their plans for the US, their biggest export destination, the US President Donald Trump has announced timelines for imposing additional tariffs on all generic drugs imports into the US. While the current practice of having 0% tariff on generic medicine imports will continue for two years from August 1, the tariff rate will be raised to 100% from August 2028 for one year and to 200% thereafter if companies fail to establish local manufacturing presence.

The move completes Trump’s tariff plan for the pharmaceutical sector as it comes months after he announced a similar plan for levying additional tariffs on patented medicines and pharmaceutical ingredients imports. In the case of patented medicines, Trump had announced on April 2 that all such imports will be subjected to a 100% ad valorem duty, unless the global pharmaceutical majors selling patented medicines in the country come up with a plan to manufacture those products with US within a specific period of time. Depending on those plans, the additional tariff could be 20% till April 2, 2030 and 100% thereafter.

In their initial response, Indian Pharmaceutical Alliance (IPA), the organisation that represents all major domestic drug companies, reiterated India’s position as a trusted partner in ensuring the supply of affordable and quality-assured medicines for American patients. “Leading Indian pharmaceutical companies have US presence (over 40 facilities), supporting American jobs, investing in manufacturing, research and resilient supply chain. IPA will continue to engage with the US Administration to build a stronger partnership and further strengthen health and medicine security for both countries”, Sudarshan Jain, Secretary General, IPA said.

According to an analysis by Delhi based think tank Global Trade Research Initiative (GTRI), India exported $ 25.8 billion worth of pharmaceuticals worldwide in 2025, of which $ 9.7 billion, or 37.7%, went to the United States, making America India's largest pharmaceutical export market. Indian companies supply 47% of all generic prescriptions dispensed in the United States, making India the country's largest source of affordable generic medicines. However, because generics are sold at very low prices, India's share of the value of U.S. generic imports is estimated at only 30%, well below its share of prescriptions, GTRI notes.

Despite its large exposure to US market, the impact of Trump’s tariff plan on Indian exporters is unlikely to be very high as Indian generic medicines are among the lowest priced and sell for seven to ten times less than branded alternatives. “Even after a 100% tariff, many products could remain cheaper than branded medicines, meaning much of the additional cost would likely be passed on to U.S. healthcare providers, insurers and patients rather than immediately eliminating Indian exports”, says Ajay Srivastava, founder GTRI.