India pharmaceutical sector, currently unaffected by the US tariffs, could be hit by further tariff announcements, Fitch Ratings has warned. The risk of second-order effects from existing tariffs is also rising. A US-India trade deal, if secured, would reduce these risks, it says.
Fitch Ratings believes India-based corporates generally have low direct exposure to US tariffs, but the pharmaceutical industry remains vulnerable to future trade measures.
The US imposed 25% “reciprocal” tariffs on India with effect from 7 August 2025 and an additional 25% levy in connection with its oil imports from Russia, effective 27 August.
The US is a key export destination for Indian pharmaceutical companies. Biosimilars-focused Biocon Biologics Limited (BB-/Stable) derives around 40% of its sales from the US, mostly from production sites in India and Malaysia. Significant US tariffs on pharmaceutical products are not yet factored into our rating base case and could pose downside risks to its operating performance. The competitive industry landscape, the report says could limit Biocon’s ability to pass on higher costs, despite the non-discretionary demand for its products.
US customers constitute 10%-12% of total revenue for crop-protection chemical producer UPL Limited (UPL), whose consolidated profile forms the basis for the rating of its subsidiary UPL Corporation Ltd (BB/Stable). Tariffs on UPL’s products manufactured in India are set to move closer to those on products from China, potentially affecting its competitive position in the US. Nevertheless, UPL benefits from significant geographical and product diversification. “We believe it will still be able to meet its EBITDA growth guidance of 10%-14% in constant currency terms, and we see limited risk to our EBITDA growth estimate of 11% (in US dollar terms) and leverage forecast for the financial year ending March 2026 (FY26).”
