The ripple effects of US President Donald Trump's aggressive tariffs from 2025 had significantly reshaped the Indian healthcare system. With President Donald Trump announcing a reduction of tariffs to 18 per cent as part of the new bilateral trade deal, its impact on India's health sector is likely to vary in different domains.
Compared to other countries, Indian pharma sector now has a competitive advantage as China (34 per cent), Vietnam (20 per cent) and Bangladesh (20 per cent) are facing higher rates. The Indian pharma industry heavily relies on both the US and Chinese markets for revenue and raw materials, respectively, for production.
Stability of the generic drug supply is another advantage. India supplies over 40 per cent of generic drugs to the US. For generic manufacturers, the shift from 50 per cent to 18 per cent means they can maintain their presence in the US market without the extreme price hikes. This will benefit patients relying on affordable generics for chronic conditions, including diabetes and hypertension, as there will not be a sudden hike.
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The experts classify this tariff reduction as "survivable" as the earlier rates would have forced Indian manufacturers to hike prices or exit the US market.
The reduction of U.S. tariffs to a predictable 18% ceiling provides a critical lifeline for Indian manufacturers of diagnostic tools and lab consumables, who were previously facing a devastating 50% tax threat. The new competitive rate helps the US hospitals to stick with 'Made in India' supplies as a cost-effective alternative to Chinese components.
Simultaneously, India’s commitment to a 'zero-for-zero' ambition—aiming to eventually eliminate all tariffs and non-tariff barriers on US goods—promises to make high-end American medical technology, such as robotic surgery kits and advanced MRI scanners, significantly more affordable in India.
This recent reduction also secures the global drug supply chain; the 18% rate acts as a vital buffer for Indian pharmaceutical firms that rely on Chinese raw materials, preventing a collapse in the production of essential antibiotics and antivirals required for US patients.