Will Trump’s proposed drug tariffs end India’s reign as ‘pharmacy of the world’?

India's longstanding position as the "pharmacy of the world" may be impacted by U.S. President Donald Trump's proposal to impose high tariffs on generic medicines imported from India, set to take effect in 2028. The move aims to bring drug manufacturing back to the United States. Analysts warn of significant consequences for India's pharmaceutical industry, which relies heavily on exports, and the U.S. healthcare system, where generic drugs account for 90% of prescriptions.

According to India Ratings and Research, U.S. demand represents about 35% of India's pharmaceutical industry revenues, generating nearly $11 billion in sales for leading US-focused Indian companies in the fiscal year ending March 2026. Vivek Mishra, deputy director of the Strategic Studies Programme at the Observer Research Foundation, anticipates that Indian pharmaceutical companies will need to establish facilities in the U.S., with potential disruptions to supply chains and increased freight costs due to the US-Iran conflict.

However, uncertainty remains over the timing and feasibility of this move. While some Indian companies, like Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, and Aurobindo Pharma, have US manufacturing plants, the high tariffs may push up the cost of generic medicines, affecting both U.S. healthcare providers and patients.

India Ratings and Research believes the structural advantages of India's pharmaceutical industry, coupled with ongoing U.S.-India trade discussions, suggest no immediate negative implications for Indian pharmaceutical exporters. Nevertheless, the impact of the proposed tariffs on India's largest pharmaceutical export market remains unclear.