A new Fitch Ratings report cautions that Indian pharmaceutical exports could face pressure if the United States expands tariffs, with companies like Biocon Biologics particularly vulnerable given their high exposure to the US market.
Fitch Ratings has warned that Indian pharmaceutical companies may come under strain if the United States imposes fresh tariffs as part of its escalating trade measures. The US is one of the largest markets for Indian drugmakers, and new tariff barriers could disrupt export flows, increase costs, and erode competitiveness in a highly price-sensitive sector.
According to The Economic Times, the warning comes after Washington announced a 25 per cent reciprocal tariff on Indian goods effective August 7, 2025, followed by an additional 25 per cent levy on imports linked to Russian oil starting August 27. While several Indian industries are already grappling with these measures, pharmaceuticals remain particularly exposed due to their reliance on the US market.
Biocon Biologics Limited, which earns about 40 per cent of its revenue from the US through its biosimilars portfolio, has been singled out as especially vulnerable. Most of the company’s manufacturing is concentrated in India and Malaysia, leaving little buffer against potential tariff shocks. Fitch noted that while demand for biosimilars is steady, passing additional costs on to consumers in the US market could be challenging given competitive pricing pressures.
Other sectors could also feel the impact, though to a lesser degree. Auto component maker Samvardhana Motherson International, which derives nearly one-fifth of its sales from the US, has manufacturing bases in the US and Mexico that partly mitigate direct tariff exposure. Crop-protection firm UPL Limited, with 10–12 per cent of revenue from the US, may see products manufactured in India subject to duties comparable to those imposed on Chinese imports. Fitch revised Motherson’s outlook to “Stable” earlier this year, citing broader uncertainty in the global auto sector linked to trade disruptions.
Beyond manufacturing, the report highlighted implications for energy markets. Russian crude currently accounts for 30–40 per cent of India’s oil imports, and a disruption in these flows could reduce state-owned oil marketing companies’ earnings by up to 10 per cent. Fitch, however, expects government support to cushion their credit profiles.
For now, Fitch estimates limited tariff-related exposure for sectors such as IT services, cement, telecoms, and utilities. However, the agency warned that if tariff levels remain structurally higher than in other Asian markets, India’s projected 6.5 per cent GDP growth for FY26 could be at risk.
The report underscores a growing risk for India’s export-oriented sectors, particularly pharmaceuticals, where margins are already pressured by regulatory scrutiny and intense global competition. For policymakers and industry stakeholders, the possibility of widening tariff measures underscores the importance of diversification strategies, domestic capacity building, and proactive trade negotiations with the US.
