India-US Trade Agreement to Provide Crucial Clarity for Pharmaceutical Sector
NEW DELHI: Indian drug manufacturers are poised to gain significant clarity and stability under the proposed India-US trade agreement, which is expected to sharpen their expansion strategies in the world's most lucrative pharmaceutical market. This development comes at a critical time for the industry, which has faced substantial challenges despite being largely insulated from punitive US tariffs.
Quarterly Performance and Market Challenges
In the third quarter ended December 2025, major Indian pharmaceutical companies, including industry leaders like Sun Pharma, Dr Reddy's Laboratories, and Cipla, encountered significant headwinds in their generics business. These challenges stemmed from intensifying competition and persistent price erosion in the US market, highlighting the need for regulatory and trade stability.
Strategic Importance of the US Market
The United States represents a cornerstone of India's pharmaceutical export strategy, accounting for nearly 35% of the country's overall pharma shipments. In the fiscal year 2024-25, these exports surpassed $30 billion, underscoring the market's immense value. The proposed trade deal is anticipated to bolster growth prospects and enhance pipeline visibility for Indian companies, providing a much-needed boost to the sector.
Expert Insights on Trade Benefits
Industry experts emphasize that a potential India-US trade agreement offers long-awaited stability for the domestic pharmaceutical sector, which plays a vital role in supplying affordable medicines to American consumers. Kartik Jain, Partner at JSA Advocates & Solicitors, highlighted the competitive advantages, stating: "The move strengthens India's competitive position vis-à-vis other exporting jurisdictions facing higher tariff barriers. From a legal and commercial perspective, until the detailed text and implementation framework are released, Indian companies will need to carefully assess how these commitments translate into actual commercial and regulatory benefits."
Clarity on Generic Pharmaceuticals
Sujay Shetty, Global Health Industries Advisory Leader at PwC India, noted the significance of the agreement for generic drugs: "Pharma generics was hitherto left outside the tariffs. The FTA now provides clarity on that. This will help domestic generic companies with their US plans." This clarity is expected to facilitate smoother market entry and operations for Indian generics manufacturers.
Strengthening Supply Chains and Regulatory Framework
Ayush Mehrotra, Partner at Khaitan & Co., pointed out the broader implications for supply chains: "Equally, this strengthens India's role in resilient supply chains with a predictable and positive moving tariff headline." However, Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, cautioned that long-term growth will depend on factors beyond tariffs: "Beyond tariffs, the sector's long-term growth will continue to hinge on regulatory compliance, timely FDA approvals, and resilient supply chains."
Competitive Edge and Future Outlook
Analysts predict that a reduction in tariffs under the trade deal will make Indian pharmaceutical exports more competitive in the US market. This enhanced competitiveness, combined with the sector's established expertise in producing cost-effective medicines, positions India for sustained growth and deeper integration into global healthcare supply chains.
