Relevance for UPSC: GS III (Economy, Industry, International Trade); Source: The Hindu

Context

The United States has announced 100 percent tariffs on imported branded and patented pharmaceutical products from October 2025. This protectionist move creates uncertainty for India’s pharmaceutical exports, for which the US is the largest destination.

India’s Pharmaceutical Sector: Key Facts

• India is the third-largest producer of medicines by volume globally.
• Supplies nearly 40 percent of generic medicines used in the US.
• Pharma exports to the US are about 9 billion dollars annually.
• High dependence on imported active pharmaceutical ingredients, largely from China, exposes supply-chain risks.

Why the Tariff Matters

• Though generics are currently exempt, future expansion to complex generics and biosimilars remains possible.
• Higher tariffs may reduce export earnings, affect investments, and disrupt global access to affordable medicines.
• Highlights risks of market concentration and trade-policy dependence.

Conclusion

The US tariff shock underlines how geopolitics and industrial policy shape economic outcomes. India’s pharmaceutical future depends on supply-chain resilience, market diversification, and proactive trade diplomacy.

Q. India’s vulnerability to external trade shocks in the pharmaceutical sector arises mainly due to:
A. Low domestic demand for medicines
B. Heavy dependence on imported active pharmaceutical ingredients
C. Excessive government price controls
D. Weak regulatory standards

Correct Answer: B