As the Union Budget 2026 approaches, the Indian pharmaceutical and healthcare sectors are advocating for increased investment in research and development (R&D), alongside greater overall spending, to propel growth and innovation. Industry leaders believe that strategic policy support is crucial to achieving ambitious market targets, such as reaching \$120-130 billion by 2030 and \$450 billion by 2047.
A primary focus of the industry's expectations is enhanced R&D incentives, including tax credits and support for drug discovery. A survey by ET-PwC revealed that 75% of Chief Experience Officers (CXOs) consider these incentives a top priority. The goal is to transition from a volume-driven model to an innovation-led sector, fostering domestic IP and global competitiveness. Restoring the 200 percent weighted deduction for R&D spending is anticipated to free up capital for new drug development, advanced diagnostics and homegrown medical devices.
In addition to R&D, the pharmaceutical industry seeks rationalization of import duties on active pharmaceutical ingredients (APIs), key raw materials, and medical devices to improve cost competitiveness and strengthen domestic manufacturing. The industry is also calling for streamlined regulatory pathways and improved risk financing for innovation-driven biotech startups. Furthermore, addressing the GST inverted duty structure is crucial for easing liquidity pressures and improving financial efficiency across the value chain.
Beyond pharmaceuticals, the broader healthcare sector is emphasizing a shift towards preventive care. Experts are calling for increased government allocation for preventive healthcare, including early screening and disease prevention programs. Dr. Arora believes Budget 2026 must allocate funds specifically for prevention, early detection and primary-level oral health interventions. Nationwide screening programs for diseases like breast cancer and sickle cell anemia are seen as essential for early detection and reducing long-term treatment costs.
Increased investment in healthcare infrastructure, particularly in Tier 2 and Tier 3 cities, is another key demand. Dr Roopa Mepani expects Budget 2026 to finally address this imbalance with focused investments in primary care, preventive health, and critical care infrastructure, especially in Tier-2 and Tier-3 cities. This includes incentives for digital health, AI-driven diagnostics, and telemedicine to bridge the gap between doctors and patients.
The Indian Medical Association (IMA) has called for a "quantum jump" in India's budget allocation to the health sector, advocating for a 5 percent allocation to the health sector from Union and State governments. They also suggest creating health-specific savings accounts linked to Jan Dhan accounts and income tax benefits for newer hospital projects in tier 2 and 3 cities.
To fully leverage digital technologies, a core expectation from Budget 2026 is accelerated saturation and deepening of the Ayushman Bharat Digital Mission (ABDM). Budgetary support is required to integrate vertical programs into a unified digital stack, ensuring interoperable patient records across all levels of care.
Overall, the healthcare and pharmaceutical sectors are seeking a budget that prioritizes innovation, self-reliance, and accessibility. By addressing key issues such as R&D incentives, import duties, preventive care, and infrastructure development, Budget 2026 has the potential to propel these sectors towards sustained growth and global leadership.
