Medtech Shock: 5 Jaw-Dropping Ways India Can Turn a 26% Tariff Into a Golden Opportunity

India’s medtech sector was hit with a surprise 26% tariff on exports to the U.S., causing industry-wide concern. Unlike pharma, which was spared, medical devices have been caught in a trade policy that doesn’t quite add up—India actually imports twice as many devices from the U.S. as it exports. Companies like Meril Life Sciences, which have cleared U.S. regulatory hurdles, now face tough decisions on pricing and margins. Meanwhile, American firms with operations in India, such as Abbott India and Thermo Fisher, are thriving and expanding.

The move could backfire on the U.S. too, as nearly 70% of its medtech imports come from abroad. The pandemic proved how vital medical technology is, especially when medicine supply chains are stretched. With nearly 80% of India’s medtech still imported, local players are pushing for protection, but policymakers should avoid kneejerk reactions. Instead, this disruption could be a catalyst for India to strengthen its manufacturing and become a true global player in medical technology.

Medtech Shock: 5 Jaw-Dropping Ways India Can Turn a 26% Tariff Into a Golden Opportunity

India’s medical device sector is reeling from an unexpected U.S. decision to slap a steep 26% tariff on exports, catching businesses off guard. While Indian pharmaceutical companies remain untouched, the move has left medical device manufacturers scrambling. The timing is puzzling: Indian firms like Abbott India and Thermo Fisher Scientific India had recently hit record highs, celebrating strong financial performances. Now, the sector faces a storm of uncertainty.

A Policy That Raises Questions

The tariff mirrors the “America First” strategy linked to former U.S. President Donald Trump, but its application here seems flawed. In the 2023–24 fiscal year, India exported $715 million worth of medical devices to the U.S. but imported over $1.5 billion of such equipment from America. Unlike industries where India runs a trade surplus, medical devices don’t threaten U.S. economic interests. Analysts argue the tariff ignores the global nature of medical supply chains.

In November 2023, experts warned that similar tariffs could raise prices for 75% of medical devices sold in the U.S., as 69% of these products are manufactured entirely outside the country. The new tax could disrupt access to affordable healthcare tools—from surgical instruments to diagnostic machines—ultimately burdening American consumers.

Who Bears the Brunt?

Indian exporters with U.S. market access, such as Meril Life Sciences—a company known for meeting strict U.S. regulatory standards—are among the hardest hit. These firms now face a tough choice: absorb the extra costs (hurting profits) or pass them to U.S. buyers (risking lost sales). Smaller players may struggle to survive.

The ripple effect also impacts U.S. companies operating in India. Abbott India, the local arm of Abbott Laboratories, reported record revenue of ₹5,849 crore ($678 million) in FY24, with operating profit jumping 14.5% in the December quarter. Similarly, Thermo Fisher Scientific India, part of the $43 billion U.S.-based giant, operates six manufacturing plants in India and plans to expand. These firms contribute to India’s economy and job market, highlighting the interconnectedness of global trade.

India’s IT and Communications Minister underscored the sector’s importance in a social media post, signaling the government’s awareness of the challenge.

Medtech’s Critical Role

The pandemic underscored the value of medical technology. While medicines were scarce, devices like RT-PCR machines and rapid test kits became lifelines. Indian companies like Mylab Discovery briefly thrived by developing India’s first COVID-19 test kits, while Molbio Diagnostics expanded its footprint with portable diagnostic tools. Yet, India still imports 80% of its medtech needs, exposing a reliance on foreign suppliers.

Domestic manufacturers have long sought government protection to boost local production. However, knee-jerk policies like import restrictions could backfire. Instead, experts urge a focus on building long-term capabilities. Global companies in India, such as Abbott and Thermo Fisher, aren’t just filling gaps in domestic demand—they’re investing in local manufacturing, R&D, and skill development. These partnerships could strengthen India’s position in the global supply chain.

A Wake-Up Call for India

The tariff shock serves as a reminder of the medtech sector’s vulnerabilities—but also its potential. India must balance immediate concerns with strategic growth. For instance, fostering innovation, improving quality standards, and incentivizing global firms to deepen local roots could reduce import dependency. The goal should be to create a resilient ecosystem where Indian companies can compete globally without relying on short-term protections.

While the road ahead is rocky, the crisis offers an opportunity. India’s medtech sector, still in its growth phase, has shown flashes of promise. With targeted policies and collaboration between local and international players, the country could emerge as a key player in this critical industry—transforming a temporary setback into a long-term advantage.

In the end, the tariff turmoil isn’t just about trade numbers. It’s a call to action for India to invest in innovation, infrastructure, and partnerships, ensuring its medtech sector can weather future storms and thrive on the global stage.