Increased spending on healthcare to about 3-5% of India’s GDP, rationalisation of duties and GST, and policy support for preventive and digital health are some of the decisions the healthcare and pharmaceutical industry expects from the Union Budget for 2026-27.

Setting up a Healthcare Infrastructure Fund, establishing a National Network of Accredited Reference Laboratories, creating a national infrastructure for ethical animal testing and pre-clinical validation of MedTech innovations, and providing tax deductions for preventive health check-ups are some of the demands proposed by NATHEALTH, a grouping of various healthcare stakeholders in India.

“Fiscal foresight and innovation-led reforms will be essential to create a self-reliant, high-quality ecosystem that expands access and sustains long-term growth,” says Ameera Shah, President of NATHEALTH and Chairperson of Metropolis Healthcare. “India’s healthcare providers have already proven their capability and courage; now we need a powerful fiscal and policy architecture that accelerates capacity-building, unlocks next-gen technologies, and ignites deep public–private collaboration,” says Sangita Reddy, Senior Vice President, NATHEALTH, and Joint Managing Director, Apollo Hospitals.

More GST reforms

Moving healthcare spending closer to 5% of GDP is essential to address infrastructure, affordability, and workforce gaps, and support a more resilient and universal care framework, says Dr. Azad Moopen, Founder and Chairman, Aster DM Healthcare. “The next phase of reform should build on GST 2.0 through rationalised GST on advanced equipment and diagnostics, recalibrated customs duties on medical technologies, and streamlined regulatory pathways for digital health and research. Targeted incentives for private investments in Tier-2 and Tier-3 cities, health start-ups, and research-led enterprises can accelerate decentralisation and promote equitable access,” he says.

Building on the GST rationalisation measures introduced in 2025, the pharma industry is looking forward to a stable and predictable GST framework that addresses inverted duty structures, recognising the unavoidable nature of medicine expiry and quality and safety requirements, enabling smoother cost pass-through across the pharma value chain.

“This budget presents a timely opportunity to deepen support through enhanced R&D tax incentives, including the restoration of globally competitive weighted R&D deductions, expanded PLI-style measures, and targeted duty rationalisation to strengthen API self-reliance,” says Sheetal Arora, Promoter and CEO, Mankind Pharma.

Fast-tracking capacity creation for regulated markets such as the US and EU, supported by customs duty rationalisation for advanced manufacturing and quality-compliance infrastructure, is another demand from the pharmaceutical industry, which notes that India exports $30 billion worth of pharmaceutical products, contributing nearly 20% of global generic medicine volumes.

“A forward-looking Union Budget that improves ease of doing business, enhances manufacturing competitiveness, supports the innovation ecosystem, and sharpens export-oriented policies will reinforce India’s credibility as a reliable source of affordable medicines,” says Priyanka Chigurupati, Executive Director, Granules India Limited.

The pharma sector seeks rationalisation of GST rates on key raw materials to address the inverted duty structure, restoration of tax incentives on R&D spend, and expansion of PLI schemes to strengthen API self-reliance. “Increased public healthcare spending and targeted incentives for biopharma innovation are critical to sustain growth,” says Mytri Macherla, Vice President and Sector Head – Corporate Ratings, ICRA Ltd.

“Continued public investment in screening, diagnostics, and referral pathways can help reduce delays and ensure patients reach the right care sooner, especially in complex disease areas such as cancer, rare diseases, and chronic conditions,” says Annapurna Das, General Manager, Takeda India.

Med-tech wants more sops for Make in India

Incentivising Make-in-India MedTech will be crucial to reducing import dependence and building a resilient domestic healthcare manufacturing ecosystem. Additionally, expanding skill development in nursing and paramedical education is important to address workforce shortages and improve the quality of care delivery across the country, says Vivek Desai, Founder and Managing Director, HOSMAC.

“Rising lifestyle and non-communicable diseases make early screening not a choice, but a necessity. We hope the upcoming budget focuses on expanding tax incentives for preventive health check-ups, rationalising GST on diagnostic services and medical equipment, and supporting the spread of quality preventive infrastructure beyond metro cities,” says Harsh Mahajan, Chair – FICCI Health Services, and Founder, Mahajan Imaging & Labs.

After launching the Medical Devices Policy 2023 and strengthening the MedTech ecosystem in recent years, the budget should focus on consistent policy execution and deeper industry–government collaboration, says the Association of Indian Medical Devices.

Key steps include raising tariffs to 10–15% from the current 7.5% to support domestic manufacturing, adopting quality-based criteria in public procurement with preference for ICMED certification over foreign approvals, updating labelling norms to disclose domestic content percentages, and incentivising suppliers with over 50% local value addition. “These reforms, coupled with measures to enhance global competitiveness, can help India translate its capability, capacity, and credibility into lasting outcomes—positioning our nation as a leading global MedTech hub,” says Rajiv Nath, Forum Coordinator, Association of Indian Medical Devices.

Although the radical GST reform in 2025 that reduced taxes on diagnostic kits and medical devices to a mere 5% was a historic achievement for health equity, it is now imperative for the coming budget to correct the inverted duty structure, which has been pressurising domestic manufacturers. There is scope to review and harmonise certain GST rates, such as radiation protection apparel being charged at 18%, which should be brought under the 5% GST rate for consistency, says G.S.K. Velu, Chairman and Managing Director, Trivitron Healthcare. “We must now ensure self-sufficiency and reduce our massive import dependency of 80% on imported devices by adopting ‘Buy India’ initiatives or boosting research incentives like the PRIP scheme, to migrate from volume in manufacturing to depth in R&D,” he says.

The industry echoes a shared sentiment on the imminent need to streamline the existing regulatory framework through a one-regulator approach, move away from a multiplicity of processes, and improve operational efficiency. Domestic manufacturers continue to seek an increase in duty incentives of up to 5% under the current RoDTEP (Remission of Duties and Taxes on Exported Products) scheme. “The sector seeks a promising financial outlay to encourage manufacturing, continue upskilling of healthcare professionals, and improve patient outcomes,” says Anish Bafna, CEO and MD, Healthium Medtech.