Indian pharma takes 'wait-and-watch' approach to tackle Trump's 200% tariff plan | What next?

President Donald Trump on Wednesday announced a new plan to bring drug manufacturing back to the United States. Under the plan, imported generic medicines will face no tariffs for the next two years. But after that, tariffs will rise to 100% in August 2028 and 200% later.

The move could have major implications for India, which accounts for the largest share of generic drug exports to the US.

In a post on Truth Social, Trump said beginning 1 August, the US will continue to have a zero per cent tariff on all generic drugs brought into the country for two years, after which it will be raised to 100 per cent for one year, and 200 per cent thereafter.

"Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of ZERO PERCENT for two years, after which the TARIFF will be raised to 100 per cent for one year, and 200 per cent thereafter," Trump said.

"This is done to RESHORE Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them," the president stated.

He said the objective of this policy is to protect the people of the United States.

"The Policy on Patented, Branded, or Innovative Drugs, which has been so successful, will remain as it is," he noted.

How are Indian drugmakers likely to be impacted?

Until now, the administration had maintained that generic drugs would be exempted from tariffs, so the news came as a shock. “This is a very surprising news for the industry,” Mahesh Doshi, an executive committee member at the Indian Drug Manufacturers Association, or IDMA, told Bloomberg. “None of us were expecting this.”

In 2025, India shipped medicines worth USD 9.7 billion to the US, making up 38% of its total global pharma exports of USD 25.8 billion, the Global Trade Research Initiative estimates.

According to a New York Times report, generic drugs, such as statins and antibiotics, account for about 90% of Americans' prescriptions. They are most often manufactured in India, with heavy reliance on China for ingredients.

Doctors and supply chain experts have sharply criticised the move to taxing imported generics, saying it would raise costs, spur rationing, and lead to shortages of crucial drugs.

What options do Indian drugmakers have?

It is still unclear whether Indian drugmakers can shift manufacturing to the US, as President Trump wants, or whether making low-cost generic medicines there would be financially viable.

“Two years is not a window you can create a generic drug ecosystem in,” said Namit Joshi, chairman at the Pharmaceutical Exports Council of India, as reported by Bloomberg. He pointed to issues such as manpower availability and backwards-integrated ecosystems, including the availability of active pharmaceutical ingredients—the building blocks of drug manufacturing.

Some of them may consider making high-profit medicines in the US, either by transferring technology or partnering with local contract manufacturers, said Vishal Manchanda, a sector analyst with Systematix Group and further noted that there is another option that is to reduce reliance on US revenue and expand into other markets.

Larger Indian drugmakers are likely to wait for more details before deciding their next steps, as the full details of Trump's plan are yet to be announced.

India is often called the pharmacy of the world because it supplies affordable generic medicines to countries across the globe. These medicines are widely used to treat conditions such as hypertension, diabetes, cancer, infectious diseases, and mental health disorders.

(With inputs from agencies)