US Tariffs on Pharma Imports May Hurt Indian Firms, While Auto Sector Faces Minimal Impact: Experts
The US government’s decision to impose tariffs on pharmaceutical imports could have severe repercussions for Indian drug manufacturers, significantly increasing production costs and reducing their competitiveness in the American market. However, experts suggest that the Indian automobile sector is likely to remain largely unaffected, as the US accounts for only a small portion of its exports.
The US government’s decision to impose tariffs on pharmaceutical imports could have severe repercussions for Indian drug manufacturers, significantly increasing production costs and reducing their competitiveness in the American market. However, experts suggest that the Indian automobile sector is likely to remain largely unaffected, as the US accounts for only a small portion of its exports.
Impact on the Pharma Sector
India currently imposes a 10% import duty on American pharmaceutical products, whereas the US does not levy any import duty on Indian medicines. The new tariff measures, set to take effect on April 2, as per former US President Donald Trump’s policy announcement, could disrupt India’s pharmaceutical exports to the US.
Notably, Indian firms supplied four out of ten medical prescriptions in the US in 2022. The American market accounts for approximately one-third of India’s total pharmaceutical exports, making it a crucial revenue source. According to industry estimates, Indian pharmaceutical products saved the US healthcare system $219 billion in 2022 and around $1.3 trillion between 2013 and 2022. Another $1.3 trillion in savings is projected over the next five years from Indian generic drugs.
Legal expert Arvind Sharma from Shardul Amarchand Mangaldas & Co highlighted that the US has historically been a net importer of pharmaceutical products. A significant tariff hike could disrupt the Indian pharma sector and drive up medicine costs in the US. If these tariffs are implemented, Indian pharmaceutical companies may explore alternative export markets, including Europe, Latin America, and Africa, to mitigate the impact.
Minimal Impact on the Auto Sector
In contrast, experts believe that the Indian automobile industry will not be significantly impacted by the tariff revisions. According to Shashi Mathews, Partner at IndusLaw, the US is a minor export destination for Indian automobiles, reducing the potential impact of reciprocal tariffs.
While the Indian government has made some efforts to lower tariffs, such as reducing duties on high-end motorcycles, completely eliminating these tariffs remains unlikely, as it could harm domestic manufacturers.
As trade tensions escalate, Indian pharmaceutical companies may need to reassess their global strategies, while the auto sector appears to have little reason for concern. The long-term effects of these tariffs will depend on India’s response and any potential trade negotiations between the two countries.
Sources By Agencies
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