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 2026, Indian exporters warned of falling inventories of solvents and key starting materials as the West Asia crisis disrupted trade routes and lifted petrochemical prices – with some raw material costs rising 20 to 30 percent before supplies stabilized. India’s pharma industry, and the healthcare of patients around the world, are vulnerable to any shock that begins upstream, whether that stems from a disturbance in freight and energy markets (as we saw this year) or future Chinese policy.
Domestically, New Delhi has begun to act. The Production-Linked Incentive scheme for bulk drugs has helped restart domestic production of penicillin G and related molecules after a gap of more than two decades, commissioning capacity for 28 of 41 identified critical products. The progress is real but partial. A base hollowed out over 20 years will not be rebuilt by sales-linked incentives alone, and expanded Indian API output has tended to flow into exports rather than weaning the domestic industry off Chinese inputs.
But India’s API problem is not merely a narrow concern for domestic industry, and thus increasing Indian self-reliance should be part of its external economic diplomacy. Financing India’s API and key starting material base is how the West can secure its own pharmaceutical resilience. This is mutual leverage rather than one-way assistance. The same logic should govern critical minerals, solar modules, and batteries, where India is again a midstream node whose Chinese dependencies, if left uncured, become everyone’s dependencies. Co-investment in bulk drug parks, joint qualification of non-Chinese sources, and shared stockpiling of essential intermediates would convert a private cost for Indian firms into a public good for the partnership.
The timing favors exactly this kind of bargain. India has just concluded a landmark free trade agreement with the European Union, is deep in a more transactional trade track with the United States, and is building out a National Critical Minerals Mission explicitly aimed at cutting import dependence. Each of these channels is a natural vehicle for embedding supply chain security through trusted supplier arrangements, conformity standards, and co-financing, rather than leaving it to industrial policy alone.
The strategic conversation should therefore move on from “India as an alternative to China” toward “India as the load-bearing node whose vulnerabilities are shared.” For New Delhi, that is a more flattering and more durable proposition: its pursuit of self-reliance in strategic inputs is not parochial industrial policy but a contribution to allied supply chain security.
For India’s partners, the uncomfortable truth is that they cannot insulate themselves from China by routing through India as long as India remains tethered to China. A tariff wall can keep out a finished pill, but cannot keep out the chemistry inside it.
