The US Food and Drug Administration (FDA) has significantly expanded its policy on unannounced inspections at foreign manufacturing sites for food, pharmaceuticals, and medical products destined for American markets. This move builds on the agency’s pilot programme in India and China and aims to ensure regulatory parity between domestic and international manufacturers. The decision follows criticism that foreign firms were given advance notice of inspections, in contrast to their US counterparts.

The FDA’s renewed focus on foreign inspections coincides with internal restructuring, including rehiring logistical support staff to manage the increase in site visits. The agency reiterated that refusal or obstruction of inspections, including unannounced visits, could result in regulatory action. The goal is to correct long-standing disparities in inspection standards while bolstering public trust in imported products.

India, a key exporter of pharmaceuticals to the US, is expected to be significantly affected. Many Indian companies have already begun adapting, expanding operations in the US or acquiring American firms to mitigate risk. Recent examples include Syngene International’s acquisition of a biologics plant and Sun Pharma’s purchase of Checkpoint Therapeutics.

Compounding the regulatory pressure is the latest round of trade tariffs announced by US President Donald Trump. Set to take effect on 1 August 2025, these include a 50 per cent tariff on copper imports and the potential for up to 200 per cent tariffs on pharmaceutical imports. India, with USD 9.8 billion in pharma exports to the US—40 per cent of its total pharma export value—is at particular risk. A significant portion of these exports consists of low-cost generic medicines vital to the US healthcare system.

The tariffs threaten the competitiveness of Indian generics, which may become unaffordable under increased duty burdens. Smaller Indian firms are likely to be disproportionately affected due to their limited capacity to absorb costs. Market volatility has already begun, with pharma stock prices in India showing declines after the announcement.

Trade talks between India and the US are ongoing, and their outcome will be crucial. A successful agreement could lead to exemptions or phased implementation of tariffs. In the absence of a deal, however, Indian pharma exporters face a challenging road ahead, marked by increased regulatory scrutiny and high tariff barriers.