New Delhi: Reeling under a steep tariff wall in the United States, MedTech experts said the India–US breakthrough to cut tariffs to 18 per cent would be a “game changer” for the industry.
The breakthrough on US tariffs was finalised during a phone call between the leaders of the two countries, with both later confirming the development on their respective official social media handles.
In a late night post on X, Prime Minister Narendra Modi said, “wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent.”
This follows a post by the US President Doanld Trump on Truth for Social, announcing the conclusion of a trade deal with India and agreement on reduction of tariffs.
Attributing to PM Modi, Trump posted, “as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25 per cent to 18 per cent. They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO.”
While Trump’s post mentions a reduction from 25 per cent to 18 per cent, industry executives familiar with the development said the effective tariff rate on Indian goods will lowered from 50 per cent to 18 per cent.
“The US tariff slash from 50 per cent to 18 per cent is a game-changer for Indian medical devices amid China+1 shifts and is a vital boost to our manufacturers,” said Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).
“We urge sustained India-US regulatory harmonization to capitalize fully on this opportunity for ‘Make in India’ medtech success,” he added.
According to Nath, the US tariff cut to 18 per cent on Indian goods provides Indian medical devices a competitive edge over Chinese counterparts, which were exporting at 30 per cent, but the new deal aligns India’s rate below China’s base, favoring India amid China+1 diversification.
Before the enforcement of tariff by the Trump-led US administration, medical devices from India were not subject to any tariffs in the US while imports to India attract a basic customs duty (tariffs) of 0-7.5 per cent.
Last year, the US has imposed 25 per cent reciprocal tariffs on Indian goods, along with an additional 25 per cent duty linked to Russian energy purchases.
Notably, the reduction of tariffs from the US comes days after India and the European Union concluded a trade deal, agreeing to cut duties on medical devices from 27 per cent to zero while allowing liberalised tariffs for devices made in India.
The trade deal with the EU may have strengthened India’s bargaining power, as the country now has near duty-free access to a large market, including the 27-nation bloc’s $572 billion pharma and MedTech market.
According to the Exports Promotion Council of Medical Devices, in FY 2023-24, India’s exported $714.38 million (around Rs 6000 crore) worth of medical devices to the US, while imports from the US to India were more than double at $1,519 million (around Rs 12,900 crore).>
