Indian pharma secure temporary shield in US; final tariff call due within months

pharmaceuticals

• US to lift tariffs on Indian pharma exports after interim trade deal finalized
• Section 232 probe on US pharma imports ongoing, decision pending
• India's generic drug exports exempt from 25 percent reciprocal and penal tariffs

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The US and India interim trade framework agreement offers temporary relief for Indian pharmaceutical exports, as US will remove pharmaceuticals from reciprocal tariffs once the interim deal is finalized, but the Section 232 investigation overhang continues.

"Contingent on the findings of the U.S. Section 232 investigation of pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients," the US-India joint statement said.

Analysts say that it is a "standard procedural approach" in such trade agreements.

"As noted in the Joint Statement, overall pharmaceuticals (including generics) are subject to ongoing U.S. Section 232 investigation. This is consistent with the approach across FTAs," said Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance, that represents large domestic pharmaceutical companies.

There is no clarity on whether India has agreed to cut tariffs on US the pharmaceuticals imports.

Generic pharmaceutical exports from India to US are exempt from 25 percent reciprocal tariff and an additional 25 percent penal tariff for India buying Russian oil, the broader pharmaceutical sector remains subject to an ongoing US Section 232 investigation.

Launched on April 1, 2025, by the US Department of Commerce, a Section 232 investigation is a trade tool used by the US government to determine whether the import of a particular product—in this case, pharmaceuticals—threatens to impair national security. The probe covers finished drug products (both generic and non-generic), active pharmaceutical ingredients (APIs) and key starting materials. If the investigation concludes that imports are a threat, the President has the authority to impose tariffs, quotas, or other trade restrictions to force manufacturing back to the US.

The timeframe for probe has ended in late December 2025. Once the report is received, the US President has 90 days to decide whether to act on the findings. If the President decides to impose tariffs or restrictions, it must be implemented within 15 days of that decision.

“Strengthening the India–U.S. medicines partnership is important, as medicine security is a part of national security,” Jain added.

US is India's largest pharmaceutical market, with exports around $9 billion annually, primarily consisting of affordable, off-patent generic medicines that supply nearly 40-50% of the US generic drug demand. India's generic exports significantly reduce the cost burden on US patients and payers.