US reciprocal tariff on Indian pharma exports to impact American consumers: Pharmexcil

New Delhi: Any decision by the US to impose reciprocal tariffs on Indian pharmaceutical exports would mainly impact American consumers, although the domestic industry remains cautiously optimistic, Pharmexcil said on Wednesday. Pharmaceuticals Export Promotion Council of India (Pharmexcil) Director General Raja Bhanu said that India exports goods worth over USD 8 billion every year to America. “We do not see any immediate impact. But if they impose the tariffs it will hurt American consumers only. We are into wait and watch mode. We mainly export generic drugs to them,” Bhanu said.

Citing US studies, he said overall, medicines from Indian companies provided USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022, and generics from Indian companies are expected to generate an additional USD 1.3 trillion in savings over the next five years.

“In such a situation, what can we say if they decide to impose tariffs?” Bhanu said.

He also informed that Indian pharmaceutical companies supply a substantial proportion of drugs to the US, with four out of ten of all prescriptions filled in the US in 2022 being supplied by domestic firms.

US President Donald Trump has said that he made it clear to Prime Minister Narendra Modi that India will not be spared from Washington’s reciprocal tariffs, emphasising that “nobody can argue with me” on tariff structure. On February 13, hours before Modi’s bilateral meeting with Trump in the White House, the US President announced reciprocal tariffs. During Modi’s visit to the US, while responding to a question on reciprocal tariffs on India, Trump said, “India has been, to us, just about the highest tariffed nation anywhere in the world. They’ve been very strong on tariffs, and I don’t blame them, necessarily, but it’s a different way of doing business. It’s very hard to sell to India because they have trade barriers and very strong tariffs.”

During his first term as the US president, Trump described India as a tariff king and in May 2019, terminated India’s preferential market access — Generalised System of Preferences (GSP) — to the US, alleging India has not given the US equitable and reasonable access to its markets.

At present, there is no import duty on Indian pharmaceuticals in the US.

Talking about overall pharma exports of India, Bhanu said the target for this fiscal is USD 29 billion.

During April-January this fiscal, the exports rose by 7.84 per cent to USD 24.3 billion as against USD 22.53 billion in April-January 2023-24. In entire 2023-24, it was USD 27.84 billion.

Issues like conflicts in certain countries, high freight rates, disturbances in supply chain, and exchange rate fluctuations are some of the challenges the sector is facing.