US President Donald Trump has announced the implementation of reciprocal tariffs on imports from India and other nations, referring to the measure as “kind reciprocal.” He criticized India’s tariffs on US goods as being “very, very tough” and stated that the US would now impose a 26% tariff on all Indian imports—half the rate India applies to American products.
During the announcement, Trump displayed a chart illustrating the tariffs imposed by countries such as India, China, the UK, and the European Union, alongside the new reciprocal tariffs the US would charge in return. According to the chart, India’s tariff rate stood at 56%, factoring in trade barriers and currency policies. The US, in response, is implementing a “discounted reciprocal tariff” of 26% on Indian goods.
Despite these tariff adjustments, India remains in a relatively favorable position compared to competitors like Vietnam, China, Indonesia, and Myanmar. Additionally, an ongoing bilateral trade agreement (BTA) between India and the US is under negotiation, with both sides aiming to finalize the deal soon to ease the burden of these reciprocal tariffs.
The MedTech and In Vitro Diagnostics (IVD) industries in India are expected to feel the effects of Trump’s tariff policy due to its reciprocal nature and existing trade disparities. These sectors may face additional customs duties from the US, given the substantial gap between the tariff rates imposed by the two nations.
The US has suggested that reciprocal tariffs may go beyond simply mirroring the tariff differential. They could also account for factors such as non-tariff barriers, value-added tax (VAT/GST), and currency fluctuations. While specific tariff rates for MedTech and IVD products have not been disclosed, the broader tariff increases are likely to make Indian exports to the US more expensive. This could place Indian medical device manufacturers at a disadvantage by raising export costs and reducing their competitiveness in the US market.
To counteract these challenges, Indian MedTech and IVD firms may look to expand exports to regions such as Europe, Southeast Asia, and Africa, where trade barriers are lower. Additionally, forming joint ventures with US-based firms or setting up local assembly units in the US could help Indian companies maintain their market presence despite higher tariffs.
Indian MedTech firms already face non-tariff barriers in the US, including high FDA registration fees and mandatory clinical trials, which make market entry and expansion difficult. In response to the new tariffs, India is considering reducing duties on US medical devices to avoid further trade retaliation from the US. Such tariff reductions could pave the way for reciprocal market access agreements that benefit both countries’ MedTech industries.
Impact on India’s Medical Device Market
While the newly imposed US tariffs will not directly affect the availability of medical devices in India, they may have indirect consequences. India is currently considering lowering tariffs on US medical devices as part of ongoing trade talks. If implemented, this move could make advanced medical devices more affordable and accessible in India. However, it may also heighten competition from US manufacturers, potentially impacting local Indian medical device producers.
Domestic manufacturers have expressed concerns that reducing import duties on US medical devices could give American firms a competitive edge, potentially stifling local production and innovation. In addition, the US has raised issues over India’s price controls on medical devices, arguing that such regulations discourage American companies from operating in the Indian market. Resolving these regulatory conflicts could enhance the availability of a wider range of medical devices in India.
Furthermore, global supply chain disruptions triggered by tariffs may influence the cost and accessibility of medical device components. If manufacturing costs rise or supply chains experience delays, the Indian medical device market could be indirectly affected.
The increased tariffs could elevate production costs for Indian MedTech firms, forcing them to either absorb the financial burden or pass it on to consumers. This would be particularly difficult for companies dependent on imported components, as they may face diminished profit margins or higher product prices.
Uncertainty surrounding trade policies and escalating costs may also deter Indian MedTech firms from investing in research and development (R&D), potentially slowing down innovation in the sector.
Certain Indian MedTech firms are particularly vulnerable to these tariffs:
- Export-Oriented Companies: Firms that heavily rely on the US market for sales will be the most affected, as higher tariffs will reduce their competitiveness.
- Small and Medium Enterprises (SMEs): SMEs, which often have limited financial resources, may struggle to absorb increased costs, making them more susceptible to declining demand or intensified competition from US firms.
- Companies Without Market Diversification: Firms that have not diversified their export markets or supply chains are at greater risk of revenue loss due to the new tariffs. Those with a broader international presence may be better positioned to withstand the impact.
Since these tariffs have been imposed through executive orders, they can be revoked or modified by the president or future administrations without requiring legislative approval. This means that trade policies could shift depending on political and economic considerations in the coming years.
