India-US trade deal: Pharma sees no major change during Section 232 probe

India's pharmaceutical exports to the US are unlikely to see major tariff changes under the interim pact as Section 232 investigations continue, though medical devices may gain from better access

The interim framework agreement between India and the United States (US) is not expected to have any major change in tariffs for the former’s pharmaceutical exports, given the ongoing investigations under Section 232 investigations by the US.

 

Industry executives told Business Standard that any changes may reflect only after the conclusion of the ongoing probes, which are being conducted globally over pricing differences and the most favoured nation (MFN) model.  

 

“As noted in the joint statement, overall pharmaceuticals (including generics) are subject to ongoing US Section 232 investigation, which is a consistent approach across free trade agreements (FTAs),” said Sudarshan Jain, secretary general of industry body Indian Pharmaceutical Alliance (IPA).

 

Section 232 investigations involve probes under the US Trade Expansion Act of 1962, which gives the US President the power to restrict imports of products that are found to threaten national security.

 

Nonetheless, the IPA welcomed the move, saying that strengthening the India-US medicines partnership is important, given that medicine security is part of national security.

 

The India-US joint statement on the agreement also states that India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients, contingent on the findings of the ongoing investigations into pharmaceuticals and pharmaceutical ingredients.

 

Currently, the pharmaceutical sector is exempt from reciprocal tariffs. An August, 2025, report from India Rating and Research suggests that the US generics market contributes roughly 35 per cent to the total revenue of the leading Indian pharma companies.

 

“The US markets rely heavily on Indian generics due to their low-cost, high-volume nature, making it challenging to replace them with the higher-cost local production,” the report noted.

 

At $10.52 billion, the US market is the largest export destination for Indian pharma companies, accounting for 34.6 per cent of the country’s $30.38 billion worth pharmaceutical exports in the financial year 2025 (FY25).

 

Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat, added that the interim pact offers reassurance for the pharmaceuticals sector due to the US’ commitment to providing negotiated outcomes.

 

“As generics form the backbone of India’s pharma exports to the US, this helps protect pricing stability, ensure supply continuity and reinforce India’s role as a reliable supplier of affordable medicines,” he said.  

 

However, with US import tariffs on Indian medical devices at 18 per cent, medical device manufacturers noted that the agreement provides a significantly larger opportunity for Indian medtech manufacturers to accelerate their growth in the US market.

 

India’s medical devices exports to the US have grown from $714.30 million in FY24 to $787.57 million in FY25, registering a 9.55 per cent annual growth.

 

Himanshu Baid, managing director at Poly Medicure, said that Indian medtech exporters would gain a meaningful competitive advantage in one of the world’s most sophisticated healthcare markets.

 

“This agreement will further empower MSMEs that depend on India-US economic engagement and create long-term opportunities for innovation-led growth,” he added.