US tariff cut to 18%: what it means for pharma and medical devices

Indian exporters across manufacturing and healthcare are set to gain a cost advantage in the US market after Washington cut tariffs on Indian goods from as high as 50% to 18%. Industry executives and analysts say the move improves India’s relative position against China and is likely to influence investment decisions, capacity utilisation and export planning across sectors.

The tariff reduction comes as global buyers continue to diversify supply chains under the China+1 approach. While Chinese exports remain subject to higher Section 301 duties, which are US tariffs imposed following investigations into unfair trade practices, Indian products now enter the US at a lower base rate. This improves pricing visibility and reduces uncertainty around long-term contracts.

According to the Ministry of Commerce and Industry, India’s manufacturing exports to the US include pharmaceuticals, medical devices, speciality chemicals, and intermediates, segments where tariff stability is a key factor in contract negotiations and capacity planning.

While the tariff cut applies to Indian exports to the US, industry executives say stronger overseas demand can have limited spillover effects at home. Higher export volumes often improve capacity utilisation for manufacturers, which can support steady domestic supplies of commonly used healthcare products. This may include high-volume medical devices such as syringes, catheters, IV cannulas, surgical disposables and diagnostic consumables, where Indian firms serve both export and domestic markets. However, companies note that domestic pricing will continue to depend on input costs, demand conditions and price regulations, particularly in regulated medical devices.

Medical devices find room to scale

Medical devices are among the sectors expected to see early benefits. India’s medical devices market is valued at about $11 billion, with exports estimated at around $3 billion annually, according to the India Brand Equity Foundation. The US is India’s largest export destination for medical devices.
Rajiv Nath, Forum Coordinator at the Association of Indian Medical Device Industry (AiMeD), said the reduction lowers export costs and improves competitiveness in the US healthcare market.

“The US tariff slash from 50% to 18% is a game-changer for Indian medical devices, slashing export costs and unlocking billions in US market potential amid China+1 shifts. AiMeD hails this as a vital boost for our manufacturers, enhancing global competitiveness, spurring investments, and creating jobs. We urge sustained India-US regulatory harmonisation to capitalise fully on this opportunity for ‘Make in India’ medtech success,” Nath said.

He added that the revised tariff structure places Indian suppliers at an advantage relative to China. “The US tariff cut to 18% on Indian goods provides Indian medical devices a competitive edge over Chinese counterparts, which face higher Section 301 tariffs typically at 25% plus additional hikes up to 50–60% on some items like respirators. Previously, India endured up to 50% duties while China had around 30%, but the new deal aligns India’s rate below China’s base, favouring India amid China+1 diversification,” Nath said.

Medical device exports from India to the US stood at $782.57 million in FY25, according to data from the Export Promotion Council for Medical Devices.

Himanshu Baid, Managing Director of Poly Medicure Ltd., said the agreement improves operating conditions for exporters. “The India-US trade deal represents a decisive inflexion point for India’s manufacturing and MedTech ambitions,” he said, adding that the US remains a key market for the company and that the agreement would support MSMEs by improving access and export competitiveness.

Speciality chemicals gain pricing clarity

Speciality chemicals exporters also expect benefits from the tariff reduction, particularly in intermediates supplied to pharmaceuticals, agrochemicals and industrial users. India’s speciality chemicals industry is valued at around $45 billion, with exports of nearly $20 billion, according to estimates from the Department for Promotion of Industry and Internal Trade and industry research cited by the India Brand Equity Foundation. The US is among the top three export destinations for the sector.

Amitt Nenwani, Managing Director of Shivtek Spechemi Industries Ltd, said the lower tariff removes a major cost barrier. “The slashing of reciprocal tariffs to 18% is a turning point for Indian Speciality Chemicals. By removing the punitive 50% ‘cliff’ linked to Russian energy, this deal restores our global cost-leadership,” he said.

“For Shivtek Spechemi Industries Ltd, this specifically accelerates our US market penetration for high-value intermediates. The immediate relief in landed costs allows us to capture market share from Chinese competitors while securing better margins on long-term contracts. This isn’t just a policy change; it sets the base for 2026,” Nenwani added.

Trade deals deepen market confidence

Analysts say the US decision should be seen alongside India’s recent trade agreements with Oman and New Zealand and ongoing negotiations with the EU and the UK.

Salil Kallianpur, a pharmaceuticals analyst, said the development points to a change in how India is viewed by trading partners. “India’s trade deal with the US, alongside agreements with Oman, NZ and with the EU + UK, marks a strategic change in how India is positioned in the global economy. I think the biggest point here is that this is about trust and must not be framed as just relief from the tariff war,” he said.

“India is moving from being a ‘China+1’ fallback to a preferred, geopolitically aligned partner. The macro impact will likely show up in higher-quality FDI, better returns on manufacturing capex, and stronger export resilience as India plugs more deeply into global value chains across manufacturing, services, and digital capabilities,” Kallianpur added.

Clearer tariffs to support long-term planning

For exporters in regulated and capital-intensive segments such as healthcare manufacturing, nutraceuticals and speciality chemicals, the lower tariff brings greater clarity to pricing and production planning.

“With tariffs now at 18%, the pressure on costs eases in a practical, day-to-day sense. Exporters retain some margin cushion, buyers feel more comfortable continuing orders, and production planning becomes less reactive due to tariff uncertainty,” said Sanjaya Mariwala, Executive Chairman and Managing Director of OmniActive Health Technologies Ltd.

Industry executives say the tariff's reset improves export economics, but note that outcomes will depend on regulatory coordination, policy consistency and execution. For manufacturers, the immediate benefit lies in improved cost visibility in the US market at a time when global buyers are reassessing sourcing strategies, said the analysts.