Since the US is their biggest market and would account for 31.3% of all exports in 2024, the Trump administration’s decision to exclude pharmaceuticals from the reciprocal tariffs has been a tremendous relief to Indian drug makers. However, there will probably be a big influence on the medical device industry, which is still one of the nation’s fastest-growing industries.
How will the tariffs impact the medical device industry?
First off, a 26% duty on Indian-imported medical items will represent a significant increase above earlier duties. Indian medical device tariffs have historically been close to nil, ranging from 0% to 6%. Additionally, this is greater than the tariffs that India has previously paid on medical devices imported from the United States, which have ranged from 0% to 7.5%, with the majority of them falling closer to 7.5%, according to Rajiv Nath, Forum Coordinator for the Association of Indian Medical Device Industry (AiMeD).
Second, the value of India’s medical equipment exports was less than half that of its US imports. According to data submitted in Parliament, India imported medical products worth $1519 million and exported medical devices worth $714.3 million to the US.
Third, it will leave the Indian sector and its rivals, like China, with very little margin. Imports from China are subject to a 34% tariff, which is eight percentage points more than that of India. “In some low-risk, high-volume consumables, India may appear to gain a slight price advantage over China, but the actual impact might not be substantial,” stated Himanshu Baid, Managing Director of Polymedicure.
Fourth, the industry is worried that rivals would ship their goods via a third country, such the United Kingdom or the United Arab Emirates, that has lower duties.
Fifth, there are still additional non-tariff obstacles preventing Indian goods from entering the market. “Non-tariff obstacles continue to be India’s biggest challenge, not tariffs per se. In terms of regulatory procedures, US exporters incur comparatively low expenses while entering India, while FDA approval charges in the US range from $9,280 to over $540,000, according to Baid.
What does India export to the US?
The most popular export to the United States is polyethylene bags. India’s top exports to the United States are MRI machines, ECG machines, endoscopes, and X-ray tubes, in addition to surgical knives, prosthetic joints, catheters, and eyeglass lenses. Some products, such as prosthetic joints and MRI machines, are surprisingly listed among the top imports and exports. Indian businesses are globally competitive in some products, and many nations have greater faith in Indian goods than in those made by our neighbors. However, in India, many hospitals opt to purchase well-known items instead of relatively new ones made by Indian companies since American corporations offer comparable pricing, according to Nath.
What does India import from the US?
Among these are mass spectrometers, MRI and CT scanners, artificial joints, gas analysis devices that track the body’s concentrations of gases like carbon dioxide and oxygen, and orthopaedic or fracture appliances. India has set a 7.5% tariff on the majority of the top ten products, 10% on gas analysis equipment, and 0% on chromatographs and mass spectrometers (expensive equipment used in medical laboratories).
Why is the pharmaceutical industry exempt from the tariffs?
47% of all generic medications given in the United States are supplied by Indian businesses. Additionally, India supplied more than half of the prescriptions for five of the ten most popular therapeutic areas: anti-ulcer medications, lipid-control medications, mental health medications, hypertension medications, and medications for diseases of the nervous system. According to IQVIA data, the US healthcare sector saved $219 billion in 2022 thanks to medications made by Indian firms.
