US tariffs on pharma imports can severely hit Indian companies, auto sector to remain secure: Specialists

In accordance with consultants, the auto sector, nevertheless, is more likely to face minimal influence because the US is a small export market.

US President Donald Trump just lately stated that reciprocal tariffs on international locations that impose excessive tariffs on US merchandise will come into impact on April 2. He had termed India as a excessive tariff-imposing nation.

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Impact on pharma sector

India at present levies about 10% import obligation on American medicine whereas no costs are levied on Indian medicine being imported by the US.

Notably, 4 of ten medical prescriptions within the US in 2022 had been equipped by Indian corporations. Moreover, Indian companies are additionally closely reliant on US importing medicines, with the nation accounting for roughly a 3rd of the Indian pharmaceutical business’s whole exports.

Shardul Amarchand Mangaldas & Co Associate Arvind Sharma instructed PTI that as of latest historical past, the US has been a web importer of pharmaceutical merchandise to satisfy its home demand.

“Within the occasion the US decides to impose substantial tariffs on pharmaceutical imports from India, the influence might ship noticeable ripples by way of the Indian pharma sector and concurrently disrupt its home consumption,” he famous.

As per business sources, total, medicines from Indian corporations offered $219 billion in financial savings to the US healthcare system in 2022 and a complete of $1.3 trillion between 2013 and 2022.

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Generics from Indian corporations are anticipated to generate an extra $1.3 trillion in financial savings over the following 5 years.

“A sudden tariff improve might considerably increase the price of medicines manufactured in and exported from India to the US, making them much less aggressive in opposition to merchandise from different international locations,” he added.

By imposing tariffs, the US may inadvertently improve its home healthcare prices, burdening shoppers and, in flip, making healthcare entry scarcer, Sharma said.

Moreover, within the state of affairs the place substantial tariffs are imposed by the US on Indian pharmaceutical merchandise, then which may encourage Indian pharma corporations to diversify their export markets, presumably shifting focus to Europe, Latin America or Africa, he stated.

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Impact on auto sector

In accordance with Shashi Mathews, Associate, IndusLaw, the latest bulletins and pushback by the Trump Administration on India’s tariff, particularly within the auto sector, can have a really minimal influence.

“Motive being that whereas entry into India could also be nicely protected and thus, closely taxed, a reciprocal tariff for importing into the US, which is a smaller export marketplace for the Indian automotive sector won’t have an effect on us a lot,” he added.

There may be some influence, particularly for the automotive elements market, he stated.

Mathews famous that regardless of the push for decreasing tariffs to zero, it’s extremely unlikely that the Indian authorities will scale back tariffs to that stage within the close to future.

“Now we have proven our inclination to decrease the tariffs by decreasing duties on high-end bikes, however bringing it to zero won’t bode nicely for the home business as nicely, and subsequently, is unlikely to occur,” he stated.