US Exempts Some Indian Specialty Medicines from Its 100% Pharma Tariff: What It Means for India
The United States imposed a 100% tariff (import tax) on specified patented medicines and their ingredients under Section 232 of the Trade Expansion Act, 1962. It took effect on 31 July 2026 for certain large named companies and on 29 September 2026 for all others.
The US has given a zero tariff to certain specialty medicines from India and 19 other trading partners, including the European Union, Japan, South Korea, Switzerland, the United Kingdom, Taiwan and several Southeast Asian countries.
The exempt categories include medicines for rare diseases (orphan drugs), fertility treatment, cell and gene therapies, antibody-drug conjugates, nuclear medicines, plasma-derived therapies, veterinary medicines and medicines to counter chemical, biological, radiological and nuclear threats. Ingredients used to make them are also covered.
These countries qualify because they have an existing or upcoming trade and security framework agreement with the US.
Generic medicines, which form most of India's drug exports to the US, are not covered by the Section 232 pharma tariff at all.
Companies can also apply to the US Department of Commerce for relief case by case, if a product meets an urgent health need.
Section 232 of the Trade Expansion Act, 1962
Section 232 is a part of a United States law called the Trade Expansion Act of 1962. It lets the US President put tariffs or limits on imports if the government finds that those imports threaten US national security. In simple words, if the US feels it depends too much on foreign supplies of something important, such as steel or medicines, it can tax those imports to protect and grow its own industry.
The 100% pharma tariff that started for most exporters on 29 September 2026 was imposed under Section 232. The zero-tariff list for specialty medicines is a carve-out inside this Section 232 action, which is why India and 19 other partners with trade frameworks get relief on those products.
India's Pharmaceutical Industry: Generic Drug Leadership
India is often called the "pharmacy of the world". It is the world's third-largest producer of medicines by volume. Most of what it makes are generic medicines: cheaper copies of drugs whose patents have expired, with the same active ingredient, strength and effect. Indian generics keep medicines affordable for patients in India, Africa, the US and many other countries.
Because India's exports to the US are mostly generics, and generics are outside the Section 232 pharma tariff, the main part of India's drug trade is not hit. The zero tariff on listed specialty medicines also protects the smaller but growing segment of Indian firms making complex and specialty products.
India-US Bilateral Trade Agreement (BTA)
The India-US Bilateral Trade Agreement is a trade deal the two countries are negotiating to make it cheaper and easier to sell goods and services to each other. It aims to cut tariffs and other trade barriers on both sides. The two countries first set a goal of finishing its first part by late 2025, and later agreed on an interim framework as a first step.
India is on the zero-tariff list for specialty medicines because it has a trade framework with the US. This shows how the BTA process is now shaping relief even under Section 232 actions, which the court ruling did not touch.
- US Section 232 tariff on patented medicines: 100%; proclamation dated 2 April 2026
- In force: 31 July 2026 (certain large named companies); 29 September 2026 (all others)
- Zero-tariff list: India plus 19 partners (20 in total, counting the EU as one)
- Exempt categories: orphan/rare disease drugs, fertility drugs, cell and gene therapies, antibody-drug conjugates, nuclear medicines, plasma-derived therapies, veterinary medicines, CBRN countermeasures, and their ingredients
- Generics and biosimilars: outside the Section 232 pharma tariff
- India's pharma exports 2025-26: about US$ 31.11 billion; to the US: about US$ 9.46 billion
- India-US interim trade framework: announced 6 February 2026