Leyla Hasanzadeh
5 min read
India and the US are on the verge of a trade agreement that will transform commerce between the two largest democracies in the world. The next few weeks of June and July 2025 will be pivotal for their trade relationship as negotiations enter advanced stages.
The goal is to take annual bilateral trade between the two nations to $500 billion by 2030 from the current $190 billion. Both sides are aiming to sign an interim agreement by early July, before US President Donald Trump resumes sweeping global reciprocal tariffs following a 90-day pause. The trade deal between India and the US is not just about tariffs, but as much about geopolitics and maintaining strategic diplomatic ties amid global uncertainty influenced by the Trump administration’s radical policies. If successful, India will become the first country to sign a bilateral trade agreement (BTA) of such with the US during President Trump’s second term in the White House.
The pharmaceutical sector is at the cornerstone of the BTA. The US is India’s largest trading partner and the largest export market for Indian-manufactured pharmaceuticals, accounting for 31.35% of India’s total pharmaceutical exports. Generic drug products account for the majority of this percentage, such that almost half (47%) of all generics used in the US are imported from India. India imposes a 10% tariff on US pharma imports, while the US does not currently charge any reciprocal duties.
The US initially exempted pharmaceuticals from a broader tariff on most imports, providing a temporary reprieve for companies in India. This may change amid President Trump’s push to encapsulate pharmaceuticals under its reciprocal tariff policy, for which a 26% levy was announced by the US for Indian imports. The threat of sector-specific duties has weighed heavily on the global pharmaceutical industry, but specifically for India and its generic drug sector. GlobalData has been closely monitoring and analysing the Trump administration’s new trade policies, with a specific focus on the impact of future potential pharmaceutical tariffs.
As part of the BTA negotiations and in light of the tariff threat, India’s pharmaceutical industry has proposed several bold measures to overcome these barriers. Some of these include:
• Tariff exemptions for pharmaceuticals
• Greater access to technology transfer for research and development
• Intellectual property legislation reforms for innovative originator medicines
• Relaxed export restrictions
• Targeted incentives to promote US manufacturing
• Low-cost generic drug supply
