US President Donald Trump has said Washington is preparing to impose a "major" tariff on pharmaceutical imports, a move that could significantly affect India’s pharma industry, NDTV reported.

Speaking at a National Republican Congressional Committee event, Trump said the proposed tariff would encourage drug manufacturers to shift operations back to the United States. Until now, pharmaceuticals and semiconductors had been excluded from the administration’s reciprocal tariff measures. Indian exports attract a 26% tariff under the new regime.

The US is India’s biggest export market for pharmaceutical goods. According to the Pharmaceuticals Export Promotion Council of India, 31% — or $8.7bn — of India’s $27.9bn in pharma exports in FY24 went to the United States.

India currently supplies more than 45% of the generic drugs and around 15% of biosimilars used in the US. NDTV reported that companies such as Dr Reddy’s, Aurobindo Pharma, Zydus Lifesciences, Sun Pharma and Gland Pharma earn between 30% and 50% of their total revenues from the American market.

Industry experts have warned that higher US tariffs on pharmaceutical imports could backfire on both economies, NDTV said. For the US, they would likely drive-up production costs, triggering price hikes and potential drug shortages. For Indian drugmakers, who operate on thin margins in the generics space, absorbing the additional costs may not be feasible — which could lead to those costs being passed on to US consumers or insurers, NDTV reported.

Analysts say the move could undermine the affordability and availability of essential medicines in the US, given its heavy reliance on low-cost Indian generics.