UPDATE: The government has now clarified it has decided to ease export restrictions and supply both hydroxychloroquine and paracetamol to other nations that are badly affected. Please read the latest on this story here.

India and the US could be headed for a trade war even as COVID-19 cases surge in both the countries.

India has not included antimalarial drug hydroxychloroquine in the list of active pharmaceutical ingredients (APIs) and their formulations, on which exports have been eased.

The country put export restrictions on these on March 3.

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Also Read: Is hydroxychloroquine really effective against coronavirus?

That has choked the supply of antimalarial drugs, of which US President Donald Trump has been a big votary to international markets.

Hydroxychloroquine is used as a prophylactic drug to prevent COVID-19 infection.

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Trump, on April 7, warned India of retaliation if it does not ease restriction on export of hydroxychloroquine.

"I spoke to him (PM Modi), Sunday morning & I said we appreciate it that you are allowing our supply (of Hydroxychloroquine) to come out, if he doesn't allow it to come out, that would be okay, but of course, there may be retaliation, why wouldn't there be?,"Trump earlier said.

With Hydroxychloroquine excluded from the list, the US may retaliate with restrictions on Indian goods. The trade relationship between the two countries, despite the excellent rapport between its leaders, have been frayed in recent times .

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The list

The drugs, on which exports have been eased, include Tinidazole, Metronidazole, Acyclovir, Vitamin B1, Vitamin B6, Vitamin B12, Progesterone, Chloramphenicol, Erythromycin salts, Neomycin, Clinamycin and Ornidazole and their formulations.

"The above-mentioned APIs and formulations made from these APIs are made 'Free' for export, with immediate effect," the Director General of Foreign Trade said in a notification.

India, on March 3, banned the export of all the above drugs, fearing the shortage of essential drugs due to a supply chain disruption from China. However, many countries expressed concern about export restrictions.

Indian pharmaceutical companies have been saying that they have inventories for about 1.5 to 2 months, sufficient enough to cover domestic demand and exports. Meanwhile, supplies from China have started resuming, with COVID-19 largely contained in that region.

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