New Delhi: The government and India’s pharmaceutical industry are jointly using the ongoing bilateral trade negotiations with the US to press for relief from President Donald Trump’s proposed tariffs on imported generic medicines, according to an Indian government official and a pharmaceutical industry representative familiar with the discussions.
The discussions follow Trump’s announcement of a phased tariff regime under which generic drug imports would remain duty-free until August 2028, before attracting tariffs of 100% for a year and 200% thereafter as part of his push to expand pharmaceutical manufacturing in the US.
However, according to the people cited above, New Delhi sees the announcement as part of Washington’s negotiating strategy in the broader trade talks rather than a final policy.
“Bilateral trade discussions have been ongoing... This tariff announcement is essentially a renegotiation tactic designed to create pressure. When countries sit down at the negotiating table, these potential losses—like a $10 billion impact—are brought up to leverage concessions,” one of the people cited above said, requesting anonymity.
The $10 billion estimate broadly reflects the annual value of Indian generic drug exports to the US that could be affected if the proposed tariffs are implemented in full. Industry executives say the burden would be felt not only by Indian manufacturers through lower margins, but also by US patients through higher prices and potential drug shortages.
The person cited above said the US wants to protect its healthcare by developing its own generic sector and is wary of weaponization of generic medicine trade.
“However, during the covid-19 pandemic, India provided medicines free of cost to several countries. This reflects India's commitment to global healthcare and could be an important factor in the ongoing negotiations,” the person added.
The US is India’s largest pharmaceutical export market, accounting for $9.47 billion, or 30.4%, of the country’s total pharmaceutical exports of $31.12 billion in FY26, making the proposed tariffs one of the biggest risks facing the sector.
Industry executives argue that relocating large-scale generic drug manufacturing to the US would be commercially unviable because generics account for about 90% of US prescriptions but only 13% of pharmaceutical spending.
“India’s industry is very competitive. We have a balance of quality and quantity, and also affordable prices. We have been playing a constructive role in their (US) healthcare system for quite some time. The governments are already in discussion, so we hope that the best outcome will come which is good for the public on both sides,” the person added.
Indian companies already operate more than 40 manufacturing facilities in the US, according to the Indian Pharmaceutical Alliance (IPA), whose secretary-general Sudarshan Jain said the industry would continue engaging with the US administration.
Indian drugmakers such as Sun Pharma, Glenmark, Lupin and Aurobindo Pharma, among others, have manufacturing facilities in the US, and derive roughly 30-50% of their revenues from that geography, according to company financial disclosures and sector reports by credit rating agencies including Crisil and Icra.
Viranchi Shah, national spokesperson of the Indian Drugs Manufacturers' Association (IDMA), said Indian drugmakers were continuing to invest in US manufacturing.
“It is too early to predict exactly at this moment about the full impact, but the Indian industry and government are closely working with the US administration to find an amicable solution in the best interest of patients,” said Shah.
Queries emailed to the spokespersons of India’s Department of Pharmaceuticals and commerce ministry on Tuesday remained unanswered. Queries sent to the US Embassy in New Delhi, USTR, US commerce department and India’s ministry of external affairs on Wednesday did not elicit any response.
India’s pharmaceutical trade representatives argue that shifting the entire generic ecosystem within two years is economically and structurally unviable.
“Shifting the entire generic drug manufacturing ecosystem from India to the US remains a distant prospect,” said Namit Joshi, chairman of the Pharmaceutical Export Promotion Council of India (Pharmexcil), adding that most new investments in the US are focused on branded and patented medicines, not generics, where commercial returns are far lower.
Pharmexcil is a government agency under the ministry of commerce and industry that is dedicated to promoting pharmaceutical exports from India.
“Even if generic drug manufacturing were to be established domestically, active pharmaceutical ingredients (APIs) would still need to be imported, as the US lacks sufficient domestic API manufacturing capacity,” Joshi said.
Anuj Sethi, senior director at Crisil Ratings, said the proposed tariffs could increase business risks for Indian pharmaceutical exporters, given the US accounts for nearly one-third of India's pharma exports.
However, he added that several structural strengths provide support: “The US is heavily reliant on imported generics, with Indian manufacturers supplying about 40% of its demand. This may enable the pass-through of a portion of tariff-related cost increases across the value chain.”
He added that the two-year implementation window would also give companies time to adapt supply chains, while the final tariff structure and trade negotiations were still evolving. As a result, he expects the credit profiles of Indian drugmakers to remain stable, supported by strong balance sheets.
While the proposed tariffs raise concerns over higher US healthcare costs and export stability, the move also comes against the backdrop of the India-US Interim Trade Agreement announced in February 2026.