Import Duty Waiver on Life-Saving Drugs

February 6, 2025

The Union Budget 2025 introduced changes to import duties on life-saving drugs. The government has waived import duties on 36 essential medications and reduced it for an additional six. This initiative aims to make critical treatments more affordable for patients in India. Despite the reduction in costs, most imported drugs remain under patent protection, keeping them expensive.

Changes in Import Duties

The basic customs duty on life-saving medicines is set at 5%.
The 2025 Budget now exempts 36 drugs used for cancer and rare diseases from any import duty.
Additionally, the import duty for six other life-saving drugs has been reduced to 5% from 7.5%.
Another 37 drugs under patient assistance programs are also exempted from the duty.
This policy supports patients reliant on imported medications for severe medical conditions.

Goods and Services Tax on Medicines

All finished formulations of medicines attract a GST of 12%. However, specific medicines for critically ill patients are taxed at a reduced rate of 5%. This tax structure aims to balance revenue generation with the need for affordable healthcare.

Impact on Patients

More than 97% of medicines sold in India are off-patented and manufactured locally. Only about 3% are patented drugs, primarily imported. The reduction in import duties is expected to make these critical medications more affordable without negatively impacting the domestic pharmaceutical industry.

Domestic Pharmaceutical Landscape

India, known as the world’s pharmacy, is the third-largest manufacturer of medicines. It produces nearly all dosage forms and off-patented drugs. Indian pharmaceuticals are renowned for being cost-effective. A global study indicates that Indian-made medicines are over 52% cheaper than international prices. This has sparked increased interest in drug research and innovation within the Indian pharmaceutical sector.

Price Regulation on Imported Drugs

All medicines sold in India, including imports, fall under the Drugs Price Control Order (DPCO). This regulation ensures that essential medicines, listed in the National List of Essential Medicines (NLEM), have fixed retail prices set by the National Pharmaceutical Pricing Authority (NPPA). The DPCO aims to balance industry needs with patient affordability while also calling for procedural simplifications.

Government Initiatives for Affordable Medicines

The Government of India, alongside regulators and the pharmaceutical industry, is committed to ensuring affordable healthcare. Initiatives like the Pradhan Mantri Jan Aushadhi Pariyojna and Ayushman Bharat aim to enhance access to affordable medicines. Patient assistance programs by drug manufacturers and charitable organisations further contribute to this goal.

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