New Delhi: India’s pharmaceutical industry, a major contributor to the country’s export earnings, may come under pressure if the United States imposes new tariffs, Fitch Ratings has cautioned in a recent report.
While Indian companies currently have limited direct exposure to existing US tariffs, the pharma sector remains particularly vulnerable to potential trade escalations. The US is a critical market for Indian drug manufacturers, and any additional tariffs could significantly disrupt the industry.
Fitch specifically pointed to Biocon Biologics Limited, which derives around 40% of its revenue from the US. The company manufactures primarily in India and Malaysia, and a substantial tariff could impact its profitability. The report noted that passing higher costs onto consumers in a price-sensitive and competitive market may not be feasible, even if demand stays strong.
The warning follows recent US trade actions, including a 25% reciprocal tariff on Indian goods effective August 7, 2025, and another 25% duty targeting imports linked to Russian oil, starting August 27. These moves have already affected the outlook for multiple Indian sectors.
Auto and chemical companies also face risks, though to a lesser extent than pharma. Samvardhana Motherson International Limited, a leading auto component supplier, earns about 20% of its revenue from the US but operates primarily from production units within the US and Mexico. Fitch had earlier revised its outlook for the company from “Positive” to “Stable” due to global trade uncertainties.
Similarly, agrochemical firm UPL Limited, which generates 10–12% of its revenue from the US, could be affected. Tariffs on its India-manufactured products may align with those currently applied to Chinese imports.
The effects of rising tariffs go beyond exports. India’s reliance on Russian crude — accounting for 30–40% of its oil imports — remains a concern. A complete disruption in Russian oil supplies could reduce state-run oil companies’ earnings by an estimated 10%, though Fitch expects government intervention would prevent a downgrade in their credit ratings.
For now, sectors like IT services, cement, telecom, and utilities are expected to experience minimal direct impact. However, Fitch warned that if Indian tariffs remain higher than those in competing Asian economies, it could weigh on the country’s projected 6.5% GDP growth for FY26.
