US 100% pharma tariff: Amid uncertainty, India gets exemption for select specialty drugs and ingredients
Indian drugmakers have received some relief from the latest US tariff measures. Washington will spare certain speciality medicines and their ingredients from a new 100 per cent tariff on patented drugs. The exemption covers treatments for rare diseases, infertility, cancer and other specialised conditions.
The exemption covers medicines used to treat rare diseases and several specialised therapies, including infertility treatments, cell and gene therapies and antibody-drug conjugates. The same zero-tariff treatment will apply to qualifying ingredients used in these products.
The US Commerce Department listed India among 20 countries eligible for the exemption in a notice published in the Federal Register.
The measure comes as Washington prepares to impose a 100 per cent tariff on specified patented pharmaceuticals and associated ingredients from today, September 29.
Which Indian drugs are exempt from the new US pharma tariff?
The products eligible for the zero per cent tariff rate include drugs designated for rare diseases, medicines used in infertility treatment, cell therapies, gene therapies and antibody-drug conjugates, commonly known as ADCs.
Certain animal pharmaceuticals are also covered. Ingredients and components associated with these qualifying medicines can receive the same zero-tariff treatment.
India joins Argentina, Bangladesh, Cambodia, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Japan, Jordan, Malaysia, North Macedonia, South Korea, Switzerland, Liechtenstein, Taiwan, Thailand, Britain and Vietnam on the exemption list.
The Commerce Department said qualifying pharmaceutical products from these jurisdictions could receive the zero tariff because the countries have a current or forthcoming trade and security framework agreement with the US.
Why is US imposing a 100% pharmaceutical tariff?
The new tariff regime stems from a proclamation issued by President Donald Trump on April 2 covering imports of patented pharmaceuticals, biologics and associated ingredients.
The policy was introduced as part of Washington’s effort to encourage pharmaceutical manufacturing inside the US.
The measure falls under Section 232 of the Trade Expansion Act, which allows the US government to impose tariffs on imports considered to have implications for national security.
The 100 per cent tariff applies to specified patented pharmaceutical products and their associated ingredients. It took effect on July 31 for companies identified in one annex and is scheduled to cover other companies from September 29.
Generic drugs remain outside the US pharma tariffs
Not all medicines are affected by the new tariff regime.
Generic medicines will not face the new Section 232 tariffs, according to the Commerce Department. The exemption also covers the ingredients used to make these drugs.
The latest notice also updates some of the definitions in the original tariff order. It now specifically includes unpatented medicines used for animal health under the definition of generic pharmaceutical products.
The US has also clarified which medicines and ingredients fall under the tariff rules. The definition covers finished drugs, the active ingredients used in them and the key materials needed to produce those ingredients.
What the US tariff exemption means for Indian pharma
The exemption could offer some relief to Indian drugmakers that sell specialised medicines and their ingredients in the US. But it will apply only to products that meet the US criteria.
Notably, US is a major market for India’s pharmaceutical industry.
Under the new US tariff rules, some speciality medicines can enter US bypassing the 100 per cent tariff. Other patented drugs that do not qualify for the exemption will remain subject to the new duty.
For Indian companies, the details will matter. Each medicine and ingredient will need to meet the US requirements to receive the zero-tariff treatment.
US pharma tariffs add another layer to India trade talks
The US tariff exemption comes amid broader uncertainty over India-US trade relations, with both countries continuing to negotiate a trade agreement.
The latest pharmaceutical tariff decision provides a specific set of rules for certain Indian drug exports even as Washington continues to reshape its wider tariff regime.
For the Indian pharmaceutical industry, the immediate focus will be on which patented medicines, therapies and ingredients meet the exemption criteria and how US customs authorities apply the new rules.
