Patented drug tariffs: India more or less shielded, says GTRI
The United States has made a decision to put really high taxes on special medicines that are protected by patents. This has caused a lot of discussion around the world about trade, healthcare and politics. At first it seems like this could be news for a country like India, which is often called the “pharmacy of the world” because it makes so many medicines.. The Global Trade Research Initiative says that India is “largely shielded” from the bad effects of these taxes.
The reason for this is because of how India sells its medicines to countries what kind of medicines it makes and how the whole world buys and sells medicines. Even though the bad effects might not be felt away this policy could cause problems in the long run.
Lets look at this issue in detail. We need to understand the policy how India sells its medicines, what the Global Trade Research Initiative says and how all of this will affect trade and healthcare.
1. Understanding the US Tax on Special Medicines
1.1 What did the US do?
In April 2026 the United States said it would:
Put a 100% tax on medicines that are protected by patents and made in other countries
This is part of a bigger plan to:
Make the US less dependent on other countries for medicines
Encourage companies to make medicines in the US
Lower the prices of medicines
The taxes are not the same for all companies. Some companies will pay:
0-20% taxes if they move their factories to the US and agree to prices
Higher taxes if they do not do what the US wants
Some countries, like the European Union, Japan and the United Kingdom will pay lower taxes because they have special trade agreements with the US. The US is doing this because it is worried about depending much on other countries for medicines.
1.2 An point: Generic medicines are exempt
The most important thing to know is that generic medicines are not affected by these taxes at least not for now. Generic medicines are versions of special medicines that are no longer protected by patents. This is why India is relatively safe from the effects of these taxes.
2. How India Sells its Medicines
2.1 Indias role in the world
India is one of the makers of medicines in the world:
It makes about 20% of all generic medicines
It sells medicines to almost every country in the world
India is known for making medicines that are cheap and good quality
2.2 India and the US
The US is Indias biggest customer:
India sold $9.7 billion worth of medicines to the US in 2025
This is 38% of all the medicines India sells to other countries
The important thing to know is that:
About 90% of the medicines India sells to the US are generic medicines
This is why the Global Trade Research Initiative says India is safe from the bad effects of the US taxes.
3. Why the Global Trade Research Initiative says India is safe
The Global Trade Research Initiative says India is safe because:
The US taxes only apply to medicines that are protected by patents and India mostly makes generic medicines
The reasons for this are:
(1) Generic medicines are exempt from the taxes
Indias main business is not affected
The US needs generic medicines to keep prices low
(2) India does not make many special medicines that are protected by patents
Companies in the US and Europe make most of these medicines
India focuses on making generic medicines and the ingredients used to make medicines
(3) The US taxes are aimed at countries that make special medicines
The Global Trade Research Initiative notes that countries like Ireland, Germany, Switzerland, the UK and Japan will be affected by the US taxes because they make special medicines.
4. How the US Taxes will Affect India
4.1 Not much will change
In the term:
India will still sell medicines to the US
The US will still need Indias generic medicines
This means:
India will not lose much money
India will still be able to sell its medicines to the US
4.2 Some companies might be affected
But some Indian companies might be affected by the US taxes. These companies make:
Special medicines
Complex medicines
The ingredients used to make special medicines
medicines
These companies might face:
Lower demand for their medicines
Pressure to lower their prices
Problems with their supply chains
5. What this means for the world
5.1 The worlds medicine supply chain will change
The US policy is a sign that:
Countries want to make their medicines
They want to be less dependent on other countries
This could lead to:
Medicine factories moving to the US
costs for medicines around the world
A more complicated supply chain
5.2 Medicine prices might go up
Even though the US wants to lower medicine prices the taxes might actually:
Make medicines more expensive in the short term
Reduce competition and lead to higher prices
Make it harder to get some medicines
5.3 Big medicine companies will be affected
These companies will have to choose between:
Paying high taxes
Moving their factories to the US
Agreeing to lower their prices
6. Risks for India
While India is safe for now there are still risks.
6.1 Generic medicines might be taxed later
The biggest risk is that:
The US might start taxing medicines too
The US has said it will review its policy in a year. If it starts taxing medicines India will be in trouble.
6.2 The US is becoming more protectionist
The US is using taxes to protect its companies. This is part of a trend:
The US is using trade barriers more often
It is using national security as a reason to make economic policies
The world is becoming less globalized
6.3 India might lose its competitive edge
If the US starts making more medicines India might lose its advantage. Indias medicines might not be as cheap or competitive.
6.4 Patent rules might change
Medicine companies might find ways to keep their patents longer. This means fewer medicines will become generic. Indias generic medicine business might suffer.
7. What India should do
7.1 Sell medicines to other countries
India should try to sell its medicines to:
Africa
Latin America
Southeast Asia
7.2 Make complex medicines
India should invest in:
Complex generic medicines
Biological medicines
Special medicines
7.3 Make its own medicine ingredients
India should reduce its dependence on other countries for medicine ingredients. It should build its supply chain.
7.4 Negotiate trade agreements
India should try to negotiate trade agreements with countries. It should try to get exemptions from taxes.
8. What this means for the economy and politics
8.1 The US tax is targeted
The US tax is not a tax. It is targeted at medicines. It is part of a plan to:
Make the US more self-sufficient
Create jobs in the US
8.2 The US is not trying to make money from the tax
The US is not trying to collect more taxes. It is trying to:
Make its medicine industry stronger
Create jobs in the US
8.3 This is part of a bigger trend
The US is using taxes to protect its own companies. It has done this before with:
Metals
Technology
The US decision to tax medicines is a big change in how the world trades medicines.. India is safe for now because it makes mostly generic medicines. India should be prepared for the future. Try to adapt to the changing world.
The important thing to remember is:
India is safe in the short term
India might face some pressure, in the medium term
India faces strategic risks in the long term
India needs to be proactive and adapt to the changing world. It needs to sell its medicines to countries make more complex medicines and negotiate trade agreements.
