Pacific Money | Economy | South Asia

Tariff-Proof But Not China-Proof: The Geopolitics of India’s Pharma Power

Washington has spared India’s generics from its new drug tariffs. But the real exposure running through India’s pharmacy lies upstream, in China – and it is the West’s problem too.

When the United States’ Trump administration unveiled 100 percent tariffs on branded pharmaceuticals in April 2026, India’s drugmakers breathed a sigh of relief. The duties hit patented medicines, not the low-cost generics that are India’s stock-in-trade, and the White House said the treatment of generics and biosimilars would be reassessed only after a year. For now, India’s robust pharma industry looks tariff-proof. It is not, however, China-proof – and exposure is a problem not only for India, but for its Western partners.

India is, by common description, the pharmacy of the world. It supplies close to 20 percent of the world’s generic medicines by volume, and in 2022, Indian firms accounted for around 47 percent of all generic prescriptions dispensed in the United States. Indian companies supplied more than half of all American prescriptions in five of the ten largest therapy areas, including hypertension, mental health and lipid regulators.

Yet this formidable export machine runs on borrowed chemistry. India sources around 70 percent of its bulk-drug imports from China, and the reliance has, if anything, deepened in recent years. Chinese suppliers accounted for about 73 percent of India’s active pharmaceutical ingredient (API) imports in the first half of fiscal year (FY) 2026, up from 68 percent in FY2019. For everyday staples such as paracetamol, penicillin and ibuprofen, China’s share of India’s imports exceeds 90 percent. This dependence is by no means unique to India; China accounts for roughly 40 percent of global API output. The reasons for its success are obvious: China offers greater economies of scale, cheaper power and effluent treatment, and sustained state support.

India’s dependence on China has geoeconomic implications – and not only for India. Most supply chain risk is mapped bilaterally, as one country’s exposure to another. The pharmaceutical chain demands a different geometry, because dependence here is transitive. Patients in the United States, the United Kingdom, and across the Global South rely on Indian formulations, which in turn rely on key starting materials from China. Each link in this chain inherits the vulnerabilities of the one before it.

This means the United States is exposed to China not only directly, but through India. Were Beijing to restrict API or intermediate exports – as it has already shown itself willing to do with rare earths, deploying export controls as instruments of statecraft – the disruption would not be contained within Indian factories. It would cascade into the American generic system and into the U.K. National Health Service, which depends on India for roughly a third of its generic medicines. Beijing’s leverage at a single upstream node is, in effect, amplified throughout the downstream partner ecosystem in India.

In April........

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