The US decision to exempt certain specialty drugs and ingredients imported from India and 19 other countries from tariffs is unlikely to bring much relief to Indian exporters, industry representatives said on Tuesday. While exporters welcomed the move, they sought assurance from the US that there would be no further threats of sanctions or higher tariffs. They also hope the India-US trade deal will safeguard them against any future challenges.
The US announced on Tuesday that it would not impose tariffs on drugs and components intended for rare diseases and infertility, along with their ingredients. The exemption will apply to India and 19 other jurisdictions that have trade agreements with the US.
“The exemption for select specialty medicines from India is a welcome development and reflects the importance of maintaining an enabling environment for pharmaceutical trade. Continued engagement and regulatory cooperation between India and the US will be important in facilitating market access, encouraging greater industry collaboration and supporting the sustained growth of pharmaceutical trade between the two countries,” said Namit Joshi, chairman, Pharmaceuticals Export Promotion Council of India (Pharmexcil).
However, exporters sought greater clarity and predictability in the implementation of the current tariff framework, particularly on product-level eligibility and classification. They expect the Indian government to ensure that the trade deal provides a stable and transparent framework for pharmaceutical trade, including broader product coverage and greater certainty over future tariff treatment.
The announcement may ease some of the immediate tariff-driven pressure on Indian exporters, who are considering setting up manufacturing arrangements in the US for products that could face the tariffs. The cost of setting up manufacturing units in the US can be about 200% higher, making local production significantly more expensive. Exporters, therefore, expect the trade deal to provide longer-term relief.
“A company needs to get clarification on whether the products fall under specialty medicines from an industry perspective. Companies are investing heavily to develop these products, and planned manufacturing capacity also requires huge investments. So, a long-term policy is very much essential for the industry,” said Rutwa Shah of Stallion Labs India, an exporter to the US.
According to the Trump administration, a 100% ad valorem tariff will be imposed on certain licensed pharmaceutical products and ingredients from September 29 under Section 232 of the Trade Expansion Act. The tariff will be effective for exporters from September 29.
