New Delhi: As the United States implemented tariffs on Indian goods, the country’s pharmaceutical exports have emerged as a notable exception, a move experts attribute to India’s indispensable role in supplying affordable generic medicines to the American healthcare system.

US President Donald Trump has enforced an additional 25 per cent tariff on Indian imports effective Wednesday, doubling the overall duty to 50 per cent on certain sectors. However, India's pharmaceutical exports, which make up around 35 per cent of the country’s total pharma shipments, have been spared from this hike.

The exemption comes as the sector is still under review within the broader framework of the US government's Section 232 national security investigation. But industry leaders believe the real reason lies in India’s critical position as the world’s largest supplier of generic medicines.

Generic drugs are central to affordable healthcare in the US. That’s likely why Indian pharma has been kept out of the tariff regime, says Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance.

India currently supplies nearly 80 per cent of the global demand for generic medicines, providing major cost advantages to healthcare systems globally, especially in the US, where drug prices have long been a hot-button issue.

A report from India Ratings and Research (Ind-Ra) backs this view, noting that Indian generics offer low-cost, high-value propositions to the US market. Despite this strategic importance, the report also highlighted that the share of US revenue in Indian pharma earnings has been gradually declining due to price erosion and its pressure on margins and profitability.

“Most Indian pharma players have a generic business in the US market, earning thin operating profitability. However, Indian companies have a diversified revenue model and a healthy balance sheet. There is no major risk to liquidity in the sector (large cash balances-10 per cent-11 per cent of revenues),” said Vivek Jain, Director, Corporates, India Ratings & Research.

Jain added that Indian pharma firms generally possess diversified revenue streams, broad funding sources, and ample headroom under existing debt covenants, making them resilient to potential future trade shocks.

IANS