While the nation patiently waits for Union Budget 2026-27 to be presented on February 1, the healthcare and pharmaceutical sectors are not looking for big-bang announcements. Industry bodies and rating agencies say the coming budget could be pivotal in determining whether India’s pharma industry can move beyond scale and volume to become an innovation-led global player.
Budget 2026 wishlist: Support for R&D
At the heart of the industry’s expectations is support for research and development. According to industry bodies, the government should consider offering globally competitive R&D incentives and fiscal support for clinical research to help the domestic pharmaceutical industry transform into a $120–130 billion sector by 2030, and scale further to $450 billion by 2047, PTI reported.
“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,” Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), said in a statement.
GST in healthcare: The big challenge
Beyond R&D incentives, the industry has also flagged the need for GST rationalisation, restoration of weighted R&D deductions, and simplification of compliance and regulatory frameworks in the upcoming budget, arguing that cost pressures and regulatory complexity continue to weigh on innovation-led investments.
Preventive healthcare takes centre stage
On the healthcare delivery side, the budget is expected to sharpen its focus on prevention, capacity building and workforce shortages, especially outside major urban centres.
“The upcoming budget is likely to focus on preventive healthcare given the significant rise in non-communicable and lifestyle diseases in the country,” Mytri Macherla, vice president and sector head – corporate ratings at ICRA, said.
To encourage fresh investments, Macherla said tax incentives for private sector investments in modernising medical facilities, particularly in tier-2 and tier-3 cities, as well as support for greenfield hospitals in rural areas, would be a welcome step.
She also pointed to structural gaps in manpower. “Given the low doctors-to-people and nurses-to-people ratio, increased allocation towards training medical personnel would be highly beneficial,” she said.
From a pharma lens, the expectations remain consistent. According to Macherla, the sector is seeking rationalisation of GST rates on key raw materials to address the inverted duty structure, restoration of tax incentives on R&D spending, and expansion of production-linked incentive (PLI) schemes to strengthen API self-reliance. Increased public healthcare spending and targeted incentives for biopharma innovation, she added, are critical to sustaining growth.
What the last Budget promised
Many of these expectations build on themes already outlined in the previous budget. The Union Budget 2025–26 had taken a measured but supportive stance on healthcare, allocating Rs 1,03,280 crore, covering health, family welfare, AYUSH, and health research.
Spending was spread across flagship programmes such as the National Health Mission, Ayushman Bharat PM-JAY, and the PM-Ayushman Bharat Health Infrastructure Mission (PM-ABHIM). The budget also announced the establishment of 200-day care cancer centres in district hospitals and a major push on medical education expansion, with over 10,000 new medical seats planned to be rolled out over the next few years.
On the policy side, the government positioned healthcare as a key pillar of inclusive growth, with an emphasis on expanding access, strengthening infrastructure and improving affordability.
How much has been delivered so far
On execution, the picture is mixed. Several initiatives announced in Budget 2025–26 have moved forward, including approvals for hundreds of day care cancer centres and expanded health infrastructure under PM-ABHIM. Digital health platforms have also scaled rapidly, with large numbers of Ayushman Bharat Health Accounts created under the Ayushman Bharat Digital Mission.
Fund utilisation under key schemes such as PM-ABHIM and medical education expansion has lagged in some years, pointing to bottlenecks at the state and institutional level. Another challenge faced here is that workforce shortages, particularly of doctors, nurses and specialists, remain acute, especially in rural and underserved areas.
What the healthcare sector is watching now
As Budget 2026–27 approaches, healthcare stakeholders are watching closely for signals that go beyond incremental allocation increases. For pharma, the focus is firmly on R&D-led growth, clinical research support and tax certainty. For healthcare delivery, the emphasis is on preventive care, workforce training and execution capacity, especially in smaller cities and rural India.