In the midst of global headlines, India’s recent decision to ban all exports of hydroxychloroquine, a drug used in response to Covid-19, is making waves. Formerly, exceptions were made for exports on ‘humanitarian grounds’ and to fulfil ‘export obligations’, but these allowances have now ceased. This move is indicative of the escalating pandemic situation, and the nation’s efforts to manage it.
What Led to the Ban?
On March 25th, 2020, the Directorate-General of Foreign Trade (DGFT), an arm of the Ministry of Commerce and Industry, first prohibited the export of hydroxychloroquine. Based in New Delhi, this organization is responsible for setting and implementing foreign trade policy with the aim of boosting India’s exports.
The latest ruling means that even Special Economic Zones/Export-Oriented Units (SEZs/EOUs) or Advance Authorisation (AA) cannot export hydroxychloroquine and its formulations. As defined by customs laws, SEZs are essentially foreign territories, and typically, governmental export bans or restrictions do not apply to them or EOUs, which are designed to stimulate outbound shipments from the country.
Under the Advance Authorisation (AA) scheme, firms are able to import raw materials free of duty but must commit to exporting their goods within a specific timeframe. Now, however, this is no longer an option for those dealing with hydroxychloroquine.
Rationale Behind the Decision
India has also ceased the export of a range of medical devices, including all types of ventilators, sanitisers, and surgical masks. The Indian Council of Medical Research (ICMR) has endorsed the use of hydroxychloroquine for health workers managing suspected or confirmed Covid-19 cases, as well as asymptomatic household contacts of confirmed cases.
While the drug is not guaranteed as a cure for Covid-19, these measures are designed to cope with rising case numbers in India.
Addressing International Interests
India is contemplating a request from the USA to release a pre-ordered quantity of hydroxychloroquine. The USA has been administering the drug, along with others, to treat Covid-19 patients and reports suggest positive results.
This could present an opportunity for India’s pharmaceutical industry to penetrate USA markets but should be balanced against domestic needs. It may contribute to resolving ongoing disputes between India and the USA regarding India’s price caps on drugs and medical equipment like stents, which have prominently featured in trade conflicts.
Notwithstanding its complete export ban, India might prioritize the USA’s request, underscoring the importance of India-US relations.
