India is considering easing trade barriers on American medical devices, a long-standing demand from Washington, in return for greater access to the US market for Indian generic drugs and pharmaceutical products. According to sources familiar with the ongoing discussions, this exchange could form a key part of the proposed Indo-US Bilateral Trade Agreement (BTA) currently being negotiated.
“India imposes their own uniquely burdensome and/or duplicative testing and certification requirements in sectors such as chemicals, telecom products, and medical devices that make it difficult or costly for American companies to sell their products in India. If these barriers were removed, it is estimated that U.S. exports would increase by at least $5.3 billion annually,” the US fact sheet noted.
Negotiators from both countries are currently engaged in sector-specific discussions via virtual meetings, with medical devices and pharmaceuticals emerging as crucial segments in the evolving trade dialogue.
India’s pharmaceutical exports have demonstrated consistent growth, reinforcing the country’s global reputation as a leading supplier of affordable medicines:
Drug and pharma exports in FY24 stood at $27.85 billion, a 9.7% increase year-on-year.
In the first 11 months of FY25, exports touched nearly $27 billion, registering 7% annualised growth.
The United States remains India's largest market, accounting for over 30% of the sector’s total exports.
Despite the current zero import duty on most Indian pharmaceutical products in the US, American companies have flagged several non-tariff barriers they face in the Indian market. On the other hand, American pharmaceutical products are subject to 0-10% tariffs in India.
Although the US has so far kept the pharmaceutical sector outside the scope of reciprocal tariffs, there are growing concerns that this might change.
President Donald Trump recently (on April 8) indicated that a “major” tariff on pharmaceutical products may be on the horizon.
“It is likely that the US could levy a sectoral tariff on pharmaceutical imports. But the impact could be temporary as it is a major component of the BTA. The first tranche of the BTA is expected to be finalised by the second quarter of FY25,” a source said.
“Meanwhile, the Indian pharma industry and exporters have been asked to de-risk their business and diversify their markets,” they added.
According to the Department of Pharmaceuticals:
India is the third largest pharmaceutical industry by volume and the 14th largest by value.
The total turnover of the pharma industry in FY 2023-24 was ₹4,17,345 crore, with an average 10.08% annual growth over the last five years.
India exported ₹2,19,439 crore worth of pharmaceutical goods in FY24 while imports stood at ₹58,440 crore.
India is also the world’s largest supplier of generic drugs, contributing to 20% of the global supply and manufacturing around 60,000 generic brands across 60 therapeutic categories.
“Access to affordable treatment for HIV from India is one of the great success stories in modern medicine. Because of their low price coupled with quality, Indian medicines are preferred worldwide, thereby earning the country the epithet ‘pharmacy of the world’,” the department said.
Sources indicated that India may consider aligning its pharmaceutical and medical device quality standards with international norms, easing regulatory hurdles for US firms.
“The BTA is being negotiated on the principle of reciprocity. A win-win deal for both partners is expected soon, which will also give greater market access to the Indian pharma industry and help it to establish a robust supply chain,” one person involved in the talks said.
India’s approach in the India-UAE Comprehensive Economic Partnership Agreement (CEPA) may serve as a precedent.
“For the first time in any trade agreement, a separate annexure on pharmaceuticals has been incorporated to facilitate access of Indian pharmaceutical products, especially automatic registration and marketing authorisation in 90 days for products approved by developed country regulators namely the United States (USFDA), the United Kingdom (UKMHRA), the European Union (EMA), and Japan (PMDA),” a source stated.
This regulatory cooperation model is seen as a benchmark for future trade pacts, including the proposed Indo-US BTA.
As both India and the US negotiate sector-specific components of the broader Bilateral Trade Agreement, a potential agreement on reciprocal market access for pharmaceuticals and medical devices could be a landmark outcome. The deal is expected to not only enhance bilateral trade but also strengthen the resilience and integration of both countries in the global healthcare supply chain.