US Tax Policy: A New Challenge for India’s Pharma Scene
Recent discussions around US tax policy have put the Indian pharmaceutical sector in the spotlight. Reports indicate that about 92% of medicines manufactured in India are consumed by the American market, underscoring how closely tied India’s pharma industry is to the United States. In this context, proposals to impose 100% tariffs on imported medicines from abroad, coupled with existing US policy shifts on trade and visas, could reshape the economics of Indian drug manufacturing and export.
As the US contemplates higher tariff barriers, industry observers note that the immediate impact would hinge on how much of India’s medicine supply chain relies on foreign inputs and how pricing adjusts in the US market. The key question is whether India can maintain its pricing advantage while safeguarding supply reliability for global buyers, especially in a sector where external dependencies exist for certain raw materials and intermediates.
Insights from Nadko Pharma Leader: Rajeev Nannapaneni
In an exclusive discussion with a leading business channel, the deputy CEO and chief executive of Nadko Pharma, Rajeev Nannapaneni, offered a measured view of the potential tariff scenario. He stressed that the current arrangements in the US—where medicines manufactured abroad could face high duties—pose a challenge, but India’s own production capacity and supply chain strengths provide a buffer. He emphasized that if US-based manufacturers remain exempt from such tariffs, Indian suppliers could still compete by emphasizing cost-competitiveness and reliability.
Nannapaneni explained that the pharma sector’s exposure is significantly lower than traditional trade barriers might imply. “When you compare medicines to other traded goods, the adverse impact from tariffs is relatively smaller because the world is highly dependent on India for active pharmaceutical ingredients (APIs) and finished drugs,” he said. He also highlighted that India’s advantage lies not only in manufacturing at scale but in its ability to source inputs from a global network, including India and nearby regions where API production is concentrated.
Tariffs and the Indian Pharma Supply Chain
The executive noted that a tariff regime of 100% on imported medicines could, in theory, be increased to 200% if policy shifts intensify. Yet he cautioned against predicting the future with certainty. “The current tariff environment is favorable for India because the US remains the largest market for Indian pharma,” he remarked. If duties rise, US buyers may face higher prices, potentially accelerating a push to diversify sourcing, alter procurement strategies, or expand local manufacturing in the United States. The bottom line, he argued, is that India’s core advantage—producing high-quality medicines at competitive costs—remains intact, provided the supply chain stays resilient.
H1B Visas and Global Talent Mobility
Beyond tariffs, Nannapaneni touched on visa policies that affect skilled workers who support the pharma ecosystem. He pointed out that a high-cost H1B visa framework could complicate the export of talent and discourage professionals from pursuing opportunities in the US. While Western markets have historically offered substantial opportunities for trained personnel, a restrictive visa regime may shift some focus back to domestic manufacturing, cross-border collaborations, and supply-chain localization.
Strategy: India’s Path Forward
The Nadko Pharma leader argues that, in today’s global landscape, the path for India is not to retreat from the US market but to fortify its position through diversification and smarter risk management. He notes that roughly half of Indian firms’ international trade activity involves the US, making it impractical to abandon the US market. Instead, India should pursue a dual strategy: strengthen its core advantage in affordable, high-quality medicines while expanding footprint in other regions and accelerating in-country production for critical APIs and formulations.
To stay competitive, he urges the government and industry to invest in end-to-end manufacturing, upgrade regulatory standards, and encourage foreign investment in new production facilities abroad. “Make in India” should evolve into a globally integrated manufacturing model, with Indian companies building plants in multiple jurisdictions to hedge against policy shifts and currency volatility. He also revealed personal investment moves, noting involvement in strategic stakes in international platforms, signaling a proactive approach to global expansion.
Conclusion
While any move to dramatically raise tariffs on imported medicines could perturb prices in the US, India’s pharma sector is unlikely to unravel. The combination of a robust domestic manufacturing base, a strong export track record, and a tide of global demand for affordable medicines gives India a resilient footing. The immediate priority is diversification—of markets, suppliers, and manufacturing footprints—so that Indian drug makers continue to play a pivotal role in global health while navigating evolving US policies.
