New Delhi: Hectic discussions were held in the Union health ministry this week to weigh options to shield India’s pharmaceutical industry from an imminent tariff regime that the Trump-led US may soon announce.
At a meeting with the health ministry this week, representatives of the Indian pharmaceutical industry are learnt to have underlined the necessity for an agreement with the US, especially on nine critical Active Pharmaceutical Ingredients (APIs) or core medication compounds which are on the Essential List and Drug Shortage list of both the nations.
ET has learnt that these include various APIs used to treat a range of bacterial and other infections such as Acyclovir, Ampicillin, Epinephrine, Methylprednisolone, Vancomycin, Penicillin G, Clindamycin, Dexamethasone and Rifampicin.
Industry inputs to the government have also pointed out the difficulties involved in setting up local manufacturing units in the US, as sought by the current Trump dispensation. It is estimated that manufacturing in the US will cost nearly 3.5 times more than in India. The process also will take at least 4-5 years. The economic viability of such a shift itself comes under question in such a scenario, it has been pointed out.
It is learnt that among the options under consideration, there is a case being made for India to opt for a fixed tariff regime model for export of pharmaceuticals to the US, at a fixed tariff commitment for a certain number of years instead of a higher and more damaging blanket tariff rate.
The industry has already called for waiving off import tariffs for US pharma products to broker peace. Reasos being the stakes for India’s pharmaceutical industry are, in fact, quite high given the trade quantum involved.
As per FY 24 figures, 31% of India’s pharma exports went to the US. India, in fact, supplies over 45% generic drugs to the US and a tariff hike is bound to hit the industry economics considerably.
Currently, while India charges a 10% tariff on pharma products imported from the US, the latter does not levy any tariff on Indian pharma imports and this has become a tricky territory.
Several rounds of discussions are, therefore, underway, ahead of US Vice President JD Vance’s visit to India next week. Vance is leading a high-powered delegation that will hold deliberations with officials from the ministries of commerce, agriculture, health besides authorities such as the Food Safety and Standards Authority of India (FSSAI ), it is gathered.
Up for discussion is also the US concern around import of nutraceuticals – an area where the Indian government is considering amendments to the current rulebook. The latest United States Trade Representative (USTR) report has pointed to how the FSSAI paperwork requirements hinder export of nutraceuticals besides other food items to India.
The health ministry, meanwhile, has been deliberating hiving off therapeutic nutraceuticals from prophylactic ones (preventive vitamin/immunity supplements) to bring in separate regulatory regimes.
Under consideration are options to keep only prophylactic ones like food supplements and vitamin gummies, etc, under the FSSAI regime and shift the other more medication-oriented or therapeutic ones to the Food and Drug Administration regime which is far more stringent.
With the US and many other countries looking to enter India’s massive nutraceutical market, such a shift will have significant implications.
