The United States has announced a phased tariff plan for imported generic medicines that could have implications for pharmaceutical exporters, including India. US President Donald Trump said the policy is intended to encourage companies to shift generic drug manufacturing to the United States by imposing steep tariffs after a two-year transition period.
The announcement is particularly important for India, one of the world’s largest suppliers of affordable generic medicines and a major exporter to the US market.
Trump outlines phased tariff plan
In a post on his Truth Social platform, President Trump said the new policy will take effect from August 1, 2026. Under the plan, imported generic medicines will continue to attract zero tariffs for the first two years.
Beginning in the third year, the tariff will increase to 100%, before rising further to 200% thereafter.
Trump said the measure is designed to encourage pharmaceutical companies to establish manufacturing facilities in the United States instead of relying on imports.
He added that companies choosing not to invest in US-based production during the transition period would face the higher tariff rates. According to Trump, the existing policy governing patented, branded and innovative medicines will remain unchanged.
Why India could be affected
India is widely regarded as the “pharmacy of the world” because of its large-scale production and export of generic medicines.
Indian generic drugs account for nearly 40% of the US generic medicine market by volume. According to a Global Trade Research Initiative (GTRI) report, India exported pharmaceutical products worth USD 9.7 billion to the United States during the 2024-25 financial year, representing around 38% of the country’s total pharmaceutical exports of USD 25.8 billion.
However, the immediate impact of the newly announced tariff policy on Indian pharmaceutical companies remains uncertain.
Existing trade agreement and industry concerns
India and the United States struck a trade pact in February that states India would receive negotiated outcomes regarding generic pharmaceuticals and pharmaceutical ingredients.
Despite that provision, previous tariff threats by Trump had already raised concerns within the pharmaceutical industry over the future of affordable medicine exports from India.
Indian pharmaceutical companies supply a wide range of generic medicines used to treat conditions including hypertension, diabetes, depression, cancer, infectious diseases and mental health disorders.
According to a Financial Post report cited in the source material, around 65% of birth control pill prescriptions in the United States during 2024 were manufactured by two India-based companies — Glenmark Pharmaceuticals Ltd. and Lupin Ltd.