Indian exporters are not expecting significant repercussions from US President Donald Trump’s recent threat to increase tariffs on automobile and pharmaceutical imports. Executives and leaders from these sectors believe that any broad tariff increase from the US would not hinder Indian companies’ competitiveness in the export market, as other Asian competitors would face similar challenges. Raja Bhanu, director general of the Pharmaceuticals Export Promotion Council of India, stated that generic drugs from India are unlikely to suffer from higher tariffs, as any increases would similarly impact competitors. India is a major hub for generic drug manufacturing, supplying over 40% of generic prescriptions in the US.
On Tuesday, Trump indicated he might impose 25% tariffs on auto, semiconductor, and drug imports, with an announcement potentially coming as soon as April 2. While this move would significantly escalate the President’s trade conflict, Indian industry leaders believe they can implement strategies to mitigate the impact. Bhanu suggested that India should eliminate existing tariffs on US formulation imports to reduce the risk of retaliatory measures from the US government.
In the fiscal year 2023-24, India exported drugs and pharmaceuticals worth $8.7 billion to the US. The two nations are also working towards finalizing a trade agreement this year, which could help protect India from the full effects of Trump’s proposed tariff increases. Sona BLW Precision Forgings Ltd., an auto component manufacturer that derives about 40% of its revenue from the US, also anticipates minimal disruption to its operations, even if Trump follows through with reciprocal tariffs. According to CEO Vivek Vikram Singh, nearly all auto components imported by India are subject to a basic import duty of only 7.5%. In 2023-24, India exported auto parts worth $6.69 billion to the US while importing parts valued at $1.6 billion from the US. Singh believes that even in a worst-case scenario of similar tariffs being imposed on Indian auto components, the overall impact would be minimal.