NEW DELHI: US President Donald Trump’s plan to introduce 25% tariff on imports of automobiles, semiconductors, and pharma could be bad news for India.
While the impact on Indian semiconductor sector is expected to be negligible as the industry is still at a nascent stage, the tariffs could inflict pain on pharma firms for whom the US is the largest export market.
As for India’s auto industry, only 0.2% of car exports go to the US. However, higher levies on auto parts could deal a blow as the auto components segment grew 7% to $11.1 billion in the first half of FY25, with North America accounting for 31% of exports.
Pharma exports to the US reached $8.73 billion in FY24, accounting for 31% of the industry’s total exports, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil) data.
Indian drugmakers expect some impact as the industry heavily relies on American demand for growth.
Sun Pharma generated 32% of its total revenue from the US in fiscal 2024. Similarly, North America contributed 47% of Dr. Reddy’s total sales and 30% of Cipla’s revenue during the same period.
Pharmexcil’s director-general Raja Bhanu said Indian pharma firms supply a substantial proportion of drugs to the US, with four out of 10 of all prescriptions filled in the US being supplied by domestic firms.
According to Namit Joshi, chairman of Pharmexcil, no major threat to generics exports is expected. “The competitiveness of Indian exports will ensure the impact of any duty hikes will be low,” he said.
At present, there is no import duty on Indian pharmaceuticals in the US.