Indian Healthcare Sector Defends Against USTR Accusations of Excess Capacity, ETHealthworld

July 23, 2026 Headlinesnews

After the US launched Section 301 investigations into structural excess capacity across several countries including India, targeting manufacturing sectors, domestic pharma and medical device sectors have submitted their positions amid such potential concerns.

The sectors have argued that domestic manufacturers neither create structural excess capacity nor resort to market-distorting pricing practices, sources told TOI.

During discussions with the US side, the pharma industry argued that domestic capacity has evolved to serve global demand for affordable medicines rather than any single market, they added.

The industry is understood to have conveyed to the US side that India accounts for about 20% of global generic medicine supplies by volume, exports pharmaceuticals worth nearly $30 billion annually, while also serving a domestic market of a similar size. The US, its largest export destination, accounts for around $10 billion, or about one-third of exports, with Indian companies supplying nearly 40% of generic prescriptions dispensed there. It also emphasised India’s competitive pricing is driven by scale and manufacturing efficiencies, rather than from unfair market practices.

Further, the medical devices industry has pushed back against Washington’s claims saying the US continues to be India’s largest supplier in medical devices, while India’s exports to the country are insignificant. Domestic medical device exports to the US remain relatively modest at around Rs 6,000 crore annually, while US imports are pegged almost triple at over Rs 16,000 crore.

The industry has argued that there is no evidence of structural excess capacity in the sector, with manufacturing capacity expanding in response to domestic demand. “The sector remains heavily import-dependent for high-end devices, which account for about 80% of demand, while domestic manufacturers are concentrated in consumables, disposables and select implantable devices’’, the Association of Indian Medical Device Industry said.

The industry has argued that capacity expansion in India’s medical device sector is market-driven and export-oriented, with no reliance on distortionary subsidies or policies, and has urged the USTR to recognise the sector’s ecosystem before taking any unilateral action under Section 301.

Media reports suggest govt has pushed back against the US claims on certain key sectors during the bilateral trade talks.