India's Pharmaceutical Industry and US Tariff Concerns
The Union health ministry of India is actively engaging in discussions to protect the Indian pharmaceutical sector from potential tariffs by the US under the Trump administration.
Importance of Critical APIs
- The Indian pharmaceutical industry has emphasized the need for an agreement with the US focusing on nine essential Active Pharmaceutical Ingredients (APIs).
- These APIs are crucial as they are listed on both countries' Essential List and Drug Shortage list.
- Examples include Acyclovir, Ampicillin, Epinephrine, Methylprednisolone, Vancomycin, Penicillin G, Clindamycin, Dexamethasone, and Rifampicin.
Challenges in Local Manufacturing
- Setting up pharmaceutical manufacturing units in the US is costly, estimated to be 3.5 times higher than in India.
- The establishment process is lengthy, requiring 4-5 years, raising concerns about economic viability.
Proposed Solutions and Trade Dynamics
- India is considering a fixed tariff regime for exporting pharmaceuticals to the US to avoid a detrimental blanket tariff rate.
- India has proposed waiving import tariffs on US pharma products to ease tensions.
The stakes are high for India, as 31% of its pharma exports in FY24 went to the US, and it supplies over 45% of the US's generic drugs.
Current Tariff Scenario
- India imposes a 10% tariff on US pharma imports, while the US imposes no tariff on Indian imports, creating a complex negotiation landscape.
Upcoming Discussions and Nutraceutical Concerns
- US Vice President JD Vance is set to visit India with a delegation for discussions with various ministries and the Food Safety and Standards Authority of India (FSSAI).
- Nutraceutical imports are a concern for the US, with the Indian government considering regulatory amendments.
- Proposals include differentiating therapeutic nutraceuticals from prophylactic ones to establish distinct regulatory frameworks.
These regulatory changes could impact India's nutraceutical market as the US and other countries are keen to enter this sector.