India, US may strike deal on medical devices for generics

NEW DELHI: India may remove trade barriers for American medical devices, one of the key asks of the US, provided Washington reciprocates with a similar treatment to Indian pharmaceutical products, including generic drugs, people aware of the ongoing sectoral talks under the proposed Indo-US bilateral trade agreement (BTA) said.

The US has raised specific tariff and non-tariff issues related to exports of its pharmaceutical products and medical devices in the Indian market, and the negotiators of both sides are seized of the matter, they said, requesting anonymity. Hindustan Times on Saturday reported that the US and India are “intensely” engaged in sector-specific talks through the virtual mode.

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India exported drugs and pharmaceuticals worth $27.85 billion in FY24 with 9.7% year-on-year growth and the sector’s exports already neared $27 billion in the first 11 months of FY25 with 7% annualised growth. The US is its largest market with little over 30% share in the sectoral export pie. While the US levies zero duty on most pharmaceuticals, American drugs attract 0-10% tariff in India.

Although the US has so far kept pharma sector out of its reciprocal tariffs’ purview, President Donald Trump recently (on April 8) spoke about a forthcoming “major” tariff on pharmaceutical products. It could be a sector-specific levy as has been the case of steel, they said, requesting anonymity.

“It is likely that the US could levy a sectoral tariff on pharmaceutical imports. But the impact could be temporary as it is a major component of the BTA. The first tranche of the BTA is expected to be finalised by the second quarter of FY25. Meanwhile, the Indian pharma industry and exporters have been asked to de-risk their business and diversify their markets,” one of them said.

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The sector is important for President Trump as it was mentioned in the fact sheet accompanying the April 2 executive order, where the US announced country-specific reciprocal tariffs, a second person said.

“India imposes their own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that U.S. exports would increase by at least $5.3 billion annually,” the fact sheet said.

“The BTA is being negotiated on the principle of reciprocity. A win-win deal for both partners is expected soon, which will also give greater market access to the Indian pharma industry and help it to establish a robust supply chain,” the first person said. India may align its quality norms with international benchmarks that would cut hassles for regulatory approvals, requirements, and certification for American products in the Indian markets, he said.

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There is a precedent in the India-United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement (CEPA), he said. For the first time in any trade agreement, a separate annexure on pharmaceuticals has been incorporated to facilitate access of Indian pharmaceutical products, especially automatic registration and marketing authorisation in 90 days for products approved by developed country regulators namely the United States (USFDA), the United Kingdom (UKMHRA), the European Union (EMA), and Japan (PMDA), he added.

According to the department of pharmaceuticals, the Indian pharmaceutical industry is the world’s third largest by volume and the 14th largest by value. The total annual turnover of pharmaceuticals was ₹4,17,345 crore for the financial year 2023-24 and has grown at an average of 10.08% over the last five years. In FY 2023-24, the total value of pharmaceuticals exported was ₹2,19,439 crore while that of pharmaceutical imports was ₹58,440 crore.

India is the world’s the largest supplier of generic drugs, accounting for about 20% of global supply. It manufactures about 60,000 generic brands, across 60 therapeutic categories, it said.

“Access to affordable treatment for HIV from India is one of the great success stories in modern medicine. Because of their low price coupled with quality, Indian medicines are preferred worldwide, thereby earning the country the epithet ‘pharmacy of the world’,” it added.