U.S. Ambassador to India Sergio Gor recently claimed that the India-U.S. trade agreement is on the verge of finalization and that “almost everything” about the agreement was done “in principle.” 

However, even as Gor was exuding confidence regarding the deal, two initiatives taken in Washington in just over a month have brought yet another round of the tariff war to India’s doorstep. These initiatives have the potential of increasing friction between the two countries, and could even torpedo the deal. 

The most egregious of these developments is the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, a bipartisan bill proposed in the U.S. Senate, which has the backing of the U.S. President Donald Trump. 

The second development is Trump’s proposal to impose 100 percent tariffs on generic medicines from 2028, unless the firms exporting these medicines do not reshore their operations to the U.S. This proposal could significantly affect India’s pharmaceutical industry since the U.S. is its largest export market.

The bipartisan Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, named after the late Republican senator, who was the bill’s strongest proponent, was overwhelmingly voted by the Senate (86-11) in early August. The House of Representatives will take up the bill for consideration after it reconvenes in early September, and could push for its early adoption.

The primary objective of the bill is to tighten the economic sanctions on Russia for its continued war on Ukraine. The bill proposes 500 percent tariffs on all goods imported into the U.S. from Russia. It also proposes 100 percent tariffs on all goods imported into the U.S. from the five largest importers of crude oil or natural gas, by total volume, originating in the Russian Federation. As one of the largest importers of Russian-origin crude oil, India also faces penal tariffs for facilitating Russia’s sanctions evasion.

Market analysts put India as the second-largest buyer of Russian crude oil in July 2026, valued at over $7.3 billion, or about 37 percent of Russia’s global exports.  

According to Indian government data, India’s dependence on Russian crude oil increased from 30 percent to nearly 43 percent of its total imports between January and June 2026. In February 2026, after the U.S. and India reached a framework for an interim agreement as a step toward finalizing the trade deal, Trump announced that the 25 percent tariffs imposed on India in August 2025 for importing Russian crude oil was withdrawn. 

India, according to Trump, had “committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States.”

However, after the conflict in West Asia, India’s dependence on Russian crude increased to record levels, and simultaneously, its imports from the U.S. dropped from 13 percent in April 2025 to three percent in June 2026. Trump would surely have viewed this development as a trigger for action against India.

India’s generic pharmaceutical industry faces uncertain times following Trump’s post on Truth Social announcing his decision to impose a 100 percent tariff on all generic medicines from 2028,  and increased to 200 percent a year by 2029. The objective of this proposed increase in tariffs is to “Reshore Generic Pharmaceutical Production into America, with a penalty to those Companies that decide not to build Plant and Equipment within the stated period of time given to them.”

This announcement followed an earlier decision by Trump to impose a 100 percent tariff on patented pharmaceuticals and associated pharmaceutical ingredients from July 31, 2026, if the companies exporting them do not declare plans to start producing in the US. Thus, Trump has put in place an expansive plan to control the global pharmaceutical industry. 

Pharmaceuticals are the second largest products in India’s export basket to the U.S., accounting for about 13 percent of total exports in 2025-26. More importantly, the U.S. is the largest export market for all major Indian pharmaceutical companies. 

The U.S. accounted for about a third of the total sales of most companies, but two Indian pharma companies — Dr. Reddy’s Laboratories and Zydus Life Sciences — are considerably more dependent on the US market: their shares of sales to the US were close to  50 percent in 2023-24. 

Besides, all the top Indian companies have invested in production capacities in the U.S. through their subsidiaries, with the largest company, Sun Pharmaceutical Industries having 21 subsidiaries in 2025-26. 

Trump’s insistence that the generic pharmaceutical companies must invest in the US to escape 100 percent tariff in 2028 has had its desired effect as  Indian companies, including pharmaceutical companies have already announced their plans to invest over  $19.1 billion to increase their production capacities in the US. 

Only time will tell whether these investments will result in diversion of India’s domestic pharmaceutical production to the U.S., and the implication this could have on the availability of medicines in India.

Originally published under Creative Commons by 360info™.