US imposes tariffs on India: From April 2, 2025, America will levy tariffs on Indian medicines. Something that will definitely affect the Indian pharma sector.
After getting into power, Trump announced US tariffs on all those countries that levy tariffs on American medicines.
Currently, the Indian automobile sector exports minimal products to America so, it won’t be completely impacted.
What exactly does this depict? And how will it affect the Indian pharma market? Let’s get a detailed insight into everything.
What Are Tariffs And Why Are They Imposed?
Tariffs are the amount of tax imposed on a product imported or exported to regulate trade between countries.
Here is why the government imposes such taxes:
- To protect local manufacturers.
- To encourage people to buy products that are manufactured in the country.
- To boost the country’s revenue through tax collection.
Confusing, right? We know, this complicated financial information seems complex. That’s why below we are explaining with one simple example.
Let’s say, a German toy company wants to sell its unique toys in India. Before their product hits the Indian market, they have to go through a complex tax process. If each product costs $10, after import duty tax, the products cost around $15.
It means $10 is the product cost, and $5 is the tax the Indian government imposes on German toys. This way, those German toys, which only cost $10, are sold at a higher price of $15 in India.
Overall, this is how the Indian government indirectly encourages people to buy products from local manufacturers.
How Will the US Tariffs Impact the Pharma Sector in India?
Without medicine, we can’t fight health problems, and that’s why the pharma industry is a crucial sector to explore.
Currently, India imposes an import duty of about 10% on pharmaceuticals imported from the United States (U.S.). However, the U.S. doesn’t impose any tariffs on Indian medicines.
Recently, Trump’s announcement shocked the Indian pharma sector. He clearly indicated that America would impose US tariffs on countries that impose tariffs on their products.
The Indian pharmaceutical market played a crucial role in the U.S. market in 2022. It supplied 4 out of every 10 medical prescriptions.
At the same time, the U.S. remained a key market for Indian drug exports and makes up nearly one-third of the industry’s total overseas shipments.
U.S. President Donald Trump has labeled India as a nation with excessively high tariffs. He announced that reciprocal tariffs on countries imposing duties on American goods will take effect starting April 2, 2025.
Arvind Sharma, a partner at Shardul Amarchand Mangaldas & Co, highlighted that the U.S. has historically been a net importer of pharma products to fulfill its domestic needs. He warned that if the U.S. imposes significant tariffs on pharmaceutical imports from India, it could create noticeable disruptions in the Indian pharmaceutical industry and potentially affect domestic consumption patterns as well.
How Will the US Tariffs Impact the Automobile Sector in India?
Now let’s focus on how will this decision impact the Indian automobile industry:
The U.S. is considering higher tariffs on auto imports. It could affect Indian manufacturers who export vehicles and auto parts to the U.S. However, the impact on India’s automotive sector is expected to be minimal due to limited exports to the U.S.
Analysts suggest that eliminating import duties on U.S. cars would not majorly impact Indian carmakers. Additionally, the U.S. has expressed interest in reducing tariffs on cars imported into India. It’s because of Elon Musk’s Tesla as they consider entering the Indian market.
Wrapping Up
In conclusion, the proposed US tariffs from April 2, 2025, would bring significant challenges for the Indian market. Whether it’s the pharmaceutical industry or the automotive sector, it heavily impacts both industries. It may also witness varied consequences depending on company size and business structure.
For example. Large firms with strong supply chains and diversified markets may adapt better, while smaller players operating on thin margins could struggle with increased costs and declining competitiveness.
Some experts argue that India’s role in the global pharmaceutical sector remains strong, and reduces severe disruptions. On the other hand, the Indian automotive sector is expected to experience minimal direct impact, as its exports to the U.S. remain relatively limited.
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