Pharma sector escapes Trump tariff, staff overjoyed

Hyderabad:US President Donald Trump’s exemption for the pharmaceutical sector from the reciprocal tariff offered relief to companies and workers in Hyderabad, which is widely seen as India’s pharma capital.

Lalit G., partner at a pharmaceutical firm operating out of Genome Valley, described the mood as one of relief. “Basically, it’s not entirely exempted, the definition hasn’t been made yet. Ten per cent might still be imposed. But if we have to absorb that to stay competitive, we will.”

His firm, like many others, relies on the American market where nearly half the generic medicines originate from India. “Roughly 47 per cent of what the US imports in medicines comes from India. Any tariff will raise their costs, not ours,” he said, pausing before adding, “They’ll just have to pass that burden to their people.”

Genome Valley accounts for close to 30 per cent of India’s pharmaceutical production. The density of output here means that even a partial tariff can rattle the balance.

Lalit pointed to how south India, especially Hyderabad, contributes over 15 percent of that 47 percent India-to-US pharma flow. “The only real question now is whether there will be any tariff at all, or a small one. That’ll decide how the market moves.”

Though pharma stocks surged after news of the exemption, he remained measured. “Could be a pump, honestly. A bit of overreaction, nothing is final. But the very fact that pharma was carved out is a good sign. They can’t move dependency away from us overnight.”

Pharmaceuticals seem to have escaped the worst of it, at least for now. Analysts say this was less about diplomacy and more about dependence. The US cannot easily fill the gap if Indian pharma pulls back.

The cost of setting up parallel production chains domestically would be steep, slow, and politically unattractive. Meanwhile, China, another major supplier, faces a 34 per cent tariff. This places India in a relatively better spot, though not without its own risks.

Unlike pharma, the tech sector appeared rattled, even if only on the surface. Joy, who works at an American firm based in Hyderabad, saw his portfolio shrink within hours.

“We lost lakhs of rupees in stock value in hours as I watched the whole thing live. It was brutal,” he said. Many employees at his company receive shares as part of their compensation, and the sudden dip in valuation was more than just a number on a screen.

Tariffs, he explained, may not directly threaten jobs, but they chip away at how companies operate. “If a US company sources components or raw materials from another country, the costs rise. That eventually makes the product more expensive. Be it Ford or Royal Enfield, everyone pays more, and that’s going to be passed on to consumers.”

Joy doesn’t see a mass layoff scenario unfolding. “This is more about pricing and perception. And this whole move is to push US-made products. It’s classic Trump.” He believes the bigger blow will be to companies relying on India as a manufacturing base for exports to the US. “It’s a long-term thing. The iPhones, the cars, those will get pricier because the parts aren't local.”