The Indian healthcare, insurance, and pharmaceutical sectors are setting their sights on the Union Budget 2026, advocating for policies that prioritize preventive care, offer tax relief, boost local manufacturing, and promote innovation. With the budget presentation scheduled for February 1, 2026, these industries are seeking reforms that will enhance affordability, accessibility, and quality within their respective domains.
Healthcare Sector Expectations
A key focus for the healthcare sector is a greater emphasis on preventive care. Industry leaders are advocating for increased public spending on early screening programs, diagnostics, and robust referral systems to ensure timely access to treatments. They argue that a focus on prevention can alleviate pressure on hospitals and reduce long-term healthcare costs. There are also calls to increase public health expenditure to over 2.5% of GDP to build a resilient healthcare ecosystem.
Another crucial aspect is making quality healthcare accessible across all regions, particularly in Tier 2, Tier 3, and rural areas. Suggestions include incentivizing the establishment of diagnostic hubs and eye hospitals in underserved regions through priority sector lending and enhanced Gap Viability Funding.
To support innovation, the sector is seeking incentives, grants, and regulatory safeguards that empower Indian innovators to develop trusted and evidence-based health ecosystems.
Insurance Sector Priorities
The insurance sector is primarily focused on increasing insurance penetration and ensuring financial security for all citizens. To achieve this, industry players are requesting better tax benefits for protection and health insurance plans across both the old and new tax regimes. Specifically, there are calls for higher and well-defined tax incentives for pure protection products like term life insurance, which could attract first-time buyers and encourage prioritization of risk cover.
Other expectations include greater support for pension and annuity products, along with a higher premium cap for tax-free maturity of Unit Linked Insurance Plans (ULIPs) to strengthen long-term financial security. Some experts suggest increasing Section 80D deductions to ₹40,000 for individuals and ₹80,000 for senior citizens to better reflect healthcare cost trends. There are also suggestions to allow Section 80D tax deductions under the new tax regime.
The industry is also advocating for structural changes such as composite licensing, which would allow insurers to sell life, health, and general insurance under a single framework, improving efficiency and lowering operating costs.
Pharmaceutical Industry Demands
The pharmaceutical industry is seeking incentives for research and development (R&D), GST rationalization, and regulatory simplification in the upcoming budget. Industry bodies are requesting globally competitive R&D incentives and fiscal support for clinical research to help transform the Indian pharma industry into an innovation-led sector. One suggestion is to expand the scope of section 115BAB of the Income Tax Act, 1961, to provide a 200% deduction rate on expenditures for companies solely engaged in pharmaceutical R&D.
Another key demand is the expansion of the Production-Linked Incentive (PLI) scheme to include active pharmaceutical ingredients (APIs) explicitly. This move would boost domestic manufacturing, reduce import dependence, and strengthen the resilience of India's drug supply chain. The industry also seeks export-linked enhancements within the PLI framework and greater alignment of PLI incentives with research and development to support the transition from volume-driven manufacturing to a more value and innovation-led growth model.
Moreover, the industry is requesting rationalization of import tariffs on critical raw materials, coupled with targeted incentives for value-added formulations and APIs, to offset rising input and compliance costs. There are also calls for faster depreciation benefits for quality and compliance investments and easier access to export credit for pharma manufacturers.
By addressing these key priorities, Budget 2026 has the potential to drive significant advancements in healthcare access, insurance coverage, and pharmaceutical innovation, ultimately benefiting the citizens of India.
