US President Donald Trump on Wednesday unveiled a phased tariff plan for imported generic medicines, giving manufacturers a two-year window before imposing sharply higher duties. Under the proposal, generic medicines will enter the US duty-free for two years from August 1, after which imports will attract a 100% tariff for one year before the levy doubles to 200%.
What the Tariff Plan Entails
The proposed tariff roadmap is designed to encourage pharmaceutical companies to establish manufacturing facilities in the United States, according to the source. Under the plan:
- Imported generic medicines will continue to attract zero tariffs for two years from August 1.
- Thereafter, imports will face a 100% tariff for one year.
- Following that, imports will be subject to a 200% levy.
The policy on patented and innovative medicines remains unchanged, the source reported.
| Phase | Period | Tariff Rate |
|---|---|---|
| 1 | 2 years from Aug 1 | 0% |
| 2 | Next 1 year | 100% |
| 3 | Thereafter | 200% |
India's Pharma Exposure to the US
According to the Department of Commerce, the United States remains India's largest pharmaceutical export market, accounting for approximately 34% of the country's pharma exports. India exports medicines to more than 200 countries, with over 60% of shipments destined for highly regulated markets such as the US and Europe.
Commerce Secretary Rajesh Agrawal stated that India's pharmaceutical exports rose 9.4% year-on-year to $30.47 billion in 2024-25, supported by a manufacturing ecosystem comprising more than 3,000 companies and 10,500 manufacturing units.
Separately, according to the US Food and Drug Administration (USFDA), generic medicines account for more than 90% of prescriptions dispensed in the US, underscoring the importance of the market for Indian drugmakers.
A Two-Year Window for Strategic Decisions
For Indian pharmaceutical companies, the transition period offers valuable time to reassess manufacturing strategies, supply chains and capital allocation, the source reported. The immediate impact on exports is likely to be limited because Trump has not imposed tariffs immediately. However, the proposed escalation to 100% and eventually 200% duties could fundamentally alter the economics of exporting generic medicines to the US if companies continue to manufacture primarily from India.
Industry executives have maintained that while India's cost-efficient manufacturing ecosystem remains globally competitive, prolonged tariff barriers could encourage companies to expand manufacturing capacity in the US or increase contract manufacturing partnerships to retain market access, according to an ET report cited in the source.
Companies with US Manufacturing Footprints
Several leading Indian drugmakers already have manufacturing operations in the United States. These include:
- Aurobindo Pharma
- Dr. Reddy's Laboratories
- Lupin
- Cipla
- Zydus Lifesciences
Companies with existing US facilities could potentially have greater flexibility if the tariff proposal is implemented as announced, the source noted.
The policy therefore shifts the conversation from tariffs alone to long-term manufacturing strategy for Indian pharma exporters.
Sources:
