Indian pharma company takes ‘wait and watch’ approach to deal with Trump’s 200% tariff plan | what next | Today’s news
President Donald Trump on Wednesday announced a new plan to bring drug manufacturing back to the United States. Under the plan, imported generic drugs will not face any tariffs for the next two years. But then the tariffs will increase to 100% in August 2028 and then to 200% later.
The move could have major implications for India, which accounts for the largest share of generic drug exports to the US.
In a post on Truth Social, Trump said early on August 1 that the US would continue to have a zero percent tariff on all generic drugs imported into the country for two years, then increase it to 100 percent for one year and then 200 percent.
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Trump announced a phased tariff plan where generic drugs would have a 0% tariff until August 1, 2026, followed by a 100% tariff for one year and then 200% from 2029 onwards.
The tariffs aim to redirect the production of generic drugs to the US and penalize companies that do not set up manufacturing plants within a set time frame.
Indian drugmakers may consider setting up production in the US for high-margin products, transferring technology or expanding into other markets to reduce dependence on US revenues.
Challenges include the high cost of setting up manufacturing facilities, the time required for reviews and approvals, and the difficulty of creating a low-cost generic drug ecosystem in the US.
Tariffs could significantly affect India’s pharmaceutical exports, which accounted for 38% of India’s total global pharmaceutical exports in 2025, which could increase costs and cause shortages of key medicines.
“Effective August 1, 2026, all generic drugs imported into the United States will continue to have a ZERO PERCENT TARIFF for two years, after which the TARIFF will increase to 100 percent for one year and then to 200 percent,” Trump said.
“This is being done to RESTORE generic pharmaceutical manufacturing to America, with penalties for those companies that choose not to build plants and facilities within the time frame they were given,” the president said.
He said the goal of the policy is to protect the people of the United States.
“The policy of patented, branded or innovative drugs, which has been so successful, will remain as it is,” he noted.
Read also | Trump threatens 200% tariffs on generic drugs and wants manufacturing to move to the US
How are Indian drug manufacturers likely to be affected?
Until now, the administration had maintained that generic drugs would be exempt from tariffs, so the news came as a shock. “This is very surprising news for the industry,” Mahesh Doshi, a member of the executive committee of the Indian Pharmaceutical Manufacturers Association, or IDMA, told Bloomberg. “None of us expected this.”
In 2025, India supplied $9.7 billion worth of drugs to the US, accounting for 38% of its total global pharmaceutical exports of $25.8 billion, the Global Trade Research Initiative estimates.
According to a New York Times report, generic drugs such as statins and antibiotics account for about 90% of Americans’ prescriptions. They are most often made in India, with a heavy reliance on China for ingredients.
Doctors and supply chain experts have sharply criticized the move to tax imported generics, saying it would raise costs, encourage rationing and lead to shortages of key medicines.
What are the options for Indian drug manufacturers?
It is still unclear whether Indian drugmakers can move production to the US, as President Trump wants, or whether it would be financially viable to make cheap generic drugs there.
“Two years is not a period in which you can create a generic drug ecosystem,” said Namit Joshi, chairman of the Pharmaceutical Exports Council of India, as reported by Bloomberg. He pointed to issues such as labor availability and backward-integrated ecosystems, including the availability of active pharmaceutical ingredients—the building blocks of drug manufacturing.
Some of them may consider manufacturing highly profitable drugs in the U.S., either through technology transfer or partnering with local contract manufacturers, said Vishal Manchanda, a sector analyst at Systematix Group, noting that there is another option to reduce dependence on U.S. revenue and expand into other markets.
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Larger Indian drugmakers are likely to wait for more details before deciding on their next steps, as the full details of Trump’s plan have yet to be announced.
India is often called the pharmacy of the world as it supplies affordable generic medicines to countries around the world. These drugs are widely used to treat conditions such as hypertension, diabetes, cancer, infectious diseases, and mental health disorders.
(With input from agencies)
