Last Updated:January 30, 2026, 20:14 IST

Industry leaders say Budget 2026 is a crucial moment to shift from a volume-driven healthcare economy to one anchored in innovation, prevention and long-term resilience

Calling for higher public health spending, the corporate honchos & healthcare lobbies have asked for targeted tax incentives for research and manufacturing, regulatory reforms to support innovation and affordability. Representational image

India’s pharmaceutical and healthcare sectors have pitched for a strong policy push in the Union Budget to raise health spending, revive R&D incentives and reform regulations to strengthen global competitiveness.

Calling for higher public health spending, the corporate honchos & healthcare lobbies have asked for targeted tax incentives for research and manufacturing, regulatory reforms to support innovation and affordability.

Industry leaders told News18 that while India has emerged as a global supplier of affordable medicines and medical devices, mounting pressures from geopolitical uncertainty, tariff barriers, supply-chain disruptions and rising non-communicable diseases (NCDs) require sustained fiscal and policy support.

The coming Budget on Sunday, they argue, is a crucial moment to shift from a volume-driven healthcare economy to one anchored in innovation, prevention and long-term resilience.

At the core of the demands are calls to revive incentives for pharmaceutical research and development, address tax and GST anomalies affecting manufacturing, strengthen domestic MedTech production, and expand public healthcare financing in line with national health targets. Healthcare providers, meanwhile, are seeking reforms in insurance coverage, reimbursements and preventive care as disease patterns shift sharply towards chronic illnesses.

Pharma: R&D push, tax reforms and manufacturing competitiveness

Pharmaceutical companies have urged the government to reinforce India’s innovation ecosystem through globally competitive R&D incentives and a stable policy environment.

According to Sudarshan Jain, secretary general, Indian Pharmaceutical Alliance, the lobby of the domestic pharma companies, including Sun Pharma, Cipla, Glenmark and IPCA Labs, “The industry seeks globally competitive R&D incentives that align with India’s innovation ambitions, enhance the scientific ecosystem, and support the transition from a volume-driven model to an innovation-led pharmaceutical sector.”

The industry is seeking restoration of the weighted R&D tax deduction of up to 200% and a strengthened patent box regime with a competitive 5% tax rate to support innovation in complex generics, biosimilars, vaccines and novel drugs. Companies have also flagged the need to rationalise GST structures to correct inverted duty anomalies that strain manufacturing viability.

Satish Reddy, chairman of pharma giant Dr Reddy’s Laboratories, believes that as the industry undertakes a strategic shift from volume-led expansion to value-driven growth, “closer alignment between science, policy and industry will be critical to advancing innovation across the value chain”. He added that expectations from the budget centre on structured funding frameworks to deepen R&D and enable translation of advanced research into high-value therapies.

“With the sector poised to play a pivotal role in realising the vision of Viksit Bharat and its ambition of becoming a $500 billion industry by 2047, expectations from the Union Budget 2026 centre on the creation of a structured funding framework to deepen innovation and R&D across the country. This would enable the companies to translate advanced research into complex, high-value therapies while improving patient access,” he suggested.

The MedTech industry echoed similar concerns, particularly regarding taxation and domestic capability-building.

“For India to build a truly competitive MedTech manufacturing ecosystem, the sector needs a policy approach that reduces cost disabilities, nurtures local innovation and enables faster market access,” Himanshu Baid, managing director at medtech firm, Poly Medicure. He flagged the inverted GST duty structure, where finished devices attract lower tax rates than inputs, leading to working capital pressures.

Global technology players also emphasised the role of artificial intelligence and exports. Dev Tripathy, head of finance, Philips (Indian Subcontinent), said, “Delivering quality healthcare to the last mile is crucial for India, and this can only be achieved by leveraging AI.”

Tripathy explained that AI will enable “early diagnosis and consolidate data points, helping clinicians make accurate decisions and bridge the supply-demand gap”. “India has the talent to drive AI-led innovation, and incentives for AI innovation, job creation, and high-end service exports through global capability centres (GCCs) must be prioritised,” he said.

Health: NCD burden, insurance gaps and preventive care

On the healthcare delivery side, hospital leaders and diagnostics players highlighted the growing dominance of non-communicable diseases and the need to pivot from episodic treatment to prevention-led care.

Ameera Shah, promoter and executive chairperson at diagnostic lab chain Metropolis Healthcare, said that India stands at a defining moment in its healthcare transition. “With non-communicable diseases projected to account for nearly 75 per cent of morbidity and mortality by 2030 and the economic cost of NCDs estimated at USD 6 trillion over the next decade, the country must urgently pivot from episodic care to comprehensive, holistic care, which is prevention-led, viable and resilient healthcare systems—an essential pillar of the Viksit Bharat vision,” said Shah, president, NATHEALTH, an apex healthcare body serving as a credible and unified voice in improving access and quality of healthcare.

Hospitals have also flagged pressure points in insurance coverage and reimbursements. Dr Purshotam Lal, director-interventional cardiologist and chairman, Metro Group of Hospitals, expects the government to widen Ayushman Bharat–Pradhan Mantri Jan Arogya Yojna (PMJAY). He added that with rising diabetes, hypertension, cardiovascular disease and cancers — especially among younger populations — India needs an insurance model that prioritises preventive healthcare.

Moreover, operational sustainability remains another concern, according to Dr Sanjeev Gupta, medical director, Sri Balaji Action Medical Institute and Action Cancer Hospital, New Delhi, who pointed to delayed reimbursements under government schemes. He said that “timely settlement of dues and clearer pricing frameworks are essential to maintain quality healthcare delivery”, adding that periodic review of package rates was necessary to keep pace with advances such as robotic surgeries and new therapies.

“In an era of rapid innovation, including robotic-assisted surgeries and advanced therapeutics, several government schemes have limited coverage for such procedures, along with capping on certain critical drugs. Periodic review of package rates is therefore essential to keep policies aligned with evolving clinical practices,” said Dr Gupta.

Together, industry leaders argue that Budget 2026 must balance affordability with innovation, strengthen domestic manufacturing, and reorient healthcare delivery towards prevention and early diagnosis — a shift they say is essential to protect both public health and long-term economic growth.

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