India's pharma, chemical tariffs lower compared to China

US President Donald Trump

India's duties on chemicals and pharmaceuticals are mostly in the range of 0-10 percent, with many pharmaceuticals at zero tariffs. On the other hand, China at 5-15 percent places extensive non-tariff barriers on these categories, data analysis shows.

Moreover, India fares well when compared to its South Asian competitors as well. While the average tariff rate on chemicals in India was 9 percent, data shows that Bangladesh levied a 9.6 percent duty on these products.

Mostly, these rates have also been coming down. In the Union Budget 2025–26 (effective February 2025), the government reduced BCD on laboratory chemicals by half, bringing tariff rates down further. Moreover, other chemicals, non-speciality ones face a maximum duty of 10 percent.

India's pharma imports have grown by nearly 50 percent since the pre-pandemic period, while chemical imports have also expanded to over $26 billion.

US President Donald Trump on July 30 announced a 25 percent plus tariff on India citing higher duties levied by New Delhi.

While this immediately threatens India’s labour-intensive exports to American shores, shipments worth over $25 billion covering pharmaceuticals and smartphones are so far secure from steeper duties given that they are under an exemption list.

India exported drugs and pharmaceutical as well as electronics products (mostly smartphones) to the tune of $10.5 billion and $14.6 billion in FY25, constituting 29 percent of its overall outbound shipments to the US.

Trump has for now exempted pharmaceuticals and certain electronic products such as laptops, smartphones from reciprocal tariffs as of now.

Trump on August 5 reiterated a threat of substantially raising tariffs on India citing New Delhi's purchase of arms and energy from Russia.

“India has not been a good trading partner...So we settled on 25%, but I think I’m going to raise that (tariff) very substantially over the next 24 hours, because they’re buying Russian oil,” US President Donald Trump told CNBC in an inteview.