Budget 2025: Finance Minister Nirmala Sitharaman will table Budget 2025 on 1 February 2025. Ahead of Union Budget 2025, industry leaders and stakeholders from the pharmaceuticals sector highlight various areas where government support can drive growth and global competitiveness.
“As the pharma sector gears up for the upcoming budget, there are key areas where government support can drive growth and global competitiveness. Firstly, an expansion of the PLI scheme to include investments in APIs reliant on imported starting materials and critical raw materials would significantly enhance India’s self-reliance in this critical sector. Secondly, incentivizing R&D through success-based fee support can promote research into cost-efficient processes, green manufacturing, and innovative drug development, which are essential for long-term sustainability,” Mridul Dhanuka, Director, Orchid Pharma said.
He also said that simplifying compliance through a single-window reporting mechanism would streamline operations for manufacturers, further enhancing ease of doing business.
“Investment in pharma parks with centralized utilities like power, water, steam, and ETP services can substantially reduce project costs, as these account for up to 60% of setup investments. Tax reforms, including lower corporate income tax rates, would make Indian manufacturers more competitive globally and encourage further investments. Lastly, greater export support, particularly for MSMEs entering regulated markets, can be a game-changer. Reimbursement of USFDA and other regulatory inspection fees, conditional on successful inspections and achieving export thresholds, would encourage more players to establish world-class facilities, boosting exports and strengthening India’s presence in global markets,” he said.
Meanwhile, Sanjay Vyas, President and Managing Director, Parexel India said that India’s pharmaceutical and clinical trials industry is experiencing rapid growth, positioning itself as a key global player. As discussions around Phase 1 clinical trials intensify, one key area of focus could be expanding government research grants and financial incentives to include private Contract Research Organizations (CROs). Currently, these grants are limited to academic institutions, but extending support to private CROs will encourage their active involvement in early discovery and clinical research.
“Building upon the foundation laid by previous initiatives, the Union Budget 2025 could prioritize targeted incentives for AI in research and development, which will accelerate innovation in drug discovery, clinical trials, and personalized patient care. Also, continued efforts in the establishment and maintaining a single, unified regulatory authority for biopharmaceuticals to simplify compliance, minimise delays, and enhance the ease of doing business will foster growth and attract greater investment in the sector,” Vyas said.
Shereef Rehuman, MD, ICEXPO Consults pvt. Ltd, highlighted the opportunity to strengthen India’s healthcare ecosystem and global competitiveness. The pharma sector anticipates enhanced incentives for domestic API and biosimilar production to reduce import dependency. To truly elevate India’s healthcare ecosystem, three critical areas demand attention.
“Bolstering healthcare manufacturing and infrastructure is essential. With India poised to be a global leader in healthcare, strategic investments in domestic manufacturing will not only enhance self-reliance but also position the country as a hub for cutting-edge medical technologies and devices. Streamlining regulatory frameworks is crucial, Simplified processes can fast-track the entry of innovative pharmaceuticals and health technologies into the market, ensuring patients benefit from advancements without unnecessary delays. A forward-looking regulatory environment can spark a wave of innovation, attracting global investments and fostering growth. Healthcare must be affordable and accessible to every citizen. Strengthening public-private partnerships and leveraging technology-driven solutions can make quality healthcare a reality for all, Rehuman informed.
Saransh Chaudhary, President, Global Critical Care, Venus Remedies Ltd and CEO, Venus Medicine Research Centre said that they expect a significant increase in the allocation of funds for R&D to make India a global pharma powerhouse, moving beyond the current 1% GDP investment.
“The government should focus on policies that incentivize research-driven pharma companies by increasing the weighted tax deduction for R&D expenditure from 100% to 200%. Strengthening domestic manufacturing is equally important, especially through an expanded Production-Linked Incentive (PLI) scheme and swift rollout of the proposed Research Linked Incentive (RLI) scheme,” Chaudhary said.
To ensure affordable healthcare, the government should introduce a graded premium structure under Ayushman Bharat to include middle-income households and offer better tax deductions to incentivize health insurance enrollment. Additionally, expanding the Janaushadhi Kendras network across the country will improve access to affordable generic medicines, he said.
At the same time, we should build on our strengths in pharma manufacturing through an incentive-based approach. One key strategy would be to expand the scope of the Production-Linked Incentive (PLI) scheme and increase its allocation to cover more pharmaceutical products and raw materials critical to self-reliance.
“This approach will help India consolidate its position as a global manufacturing hub. Achieving the goal of “Affordable Healthcare for All” must remain a top priority. Opening more Janaushadhi Kendras across the country should be prioritized, as generic medicines play a pivotal role in ensuring equitable access to healthcare. Furthermore, the government could also introduce a graded premium structure under Ayushman Bharat to include middle-income households, currently excluded from the scheme. By offering subsidies based on income levels, broader health coverage can be achieved. Additionally, higher tax deductions for health insurance premiums could incentivize greater enrollment in health insurance plans, particularly among middle-income families, he said.
Moreover, Nikkhil K Masurkar, CEO, Entod Pharmaceuticals said that as the Union Budget nears, we see an opportunity for the government to address key challenges in the pharmaceutical sector.
“Enhanced support for research and innovation is crucial. Increased funding for R&D, particularly in next-generation molecules and AI-driven drug discovery, along with extending lower taxation benefits to R&D-focused companies, could drive investment and innovation. Simplifying tax procedures and removing turnover criteria for safe harbour provisions would further strengthen India’s R&D ecosystem. Investments in healthcare infrastructure are essential for universal access. Greater public spending on health initiatives, expanding primary healthcare facilities, and broadening the reach of Ayushman Bharat can significantly improve the country’s healthcare framework,” Masurkar said.
Strengthening the Production-Linked Incentive (PLI) schemes for APIs and high-value pharma products can reduce import dependency, while better infrastructure support for MSMEs can spur innovation and job creation, he said.
“Reducing customs duties on raw materials and equipment, as well as lowering GST on essential healthcare products, would make treatments more affordable and improve global competitiveness. Simplifying processes like Advance Pricing Agreements (APA) and ensuring faster resolutions would also enhance ease of doing business. Encouraging digital transformation in healthcare through telemedicine and AI-enabled drug delivery systems will further modernize the sector. We remain optimistic that the budget will lay the groundwork for a stronger, patient-centric healthcare ecosystem,” he said.
India is now the most populated country in the world and the incidence of NCDs is increasing at an alarming speed in our country. To cater to the growing healthcare needs of fellow Indians, the budgetary allocation needs to be increased to at least about 3%. This increased allocation will also provide an opportunity for the healthcare and pharmaceutical industry to further strengthen our global leadership, Nikhil Chopra- CEO & Whole Time Director, JB Pharma said.
“To achieve this, I hope to see a strong focus on building supply chain resilience, especially to promote domestic manufacturing of essential APIs and intermediates, reduce dependence on imports, and boost self-reliance. Dedicated support toward R&D in emerging technologies like AI and data analytics is necessary, which will expedite the advancement in drug discovery and personalized medicine. The budget should also focus on initiatives that help support the growth of contract manufacturing and research organizations, or CMOs and CROs, which are very important to speed up innovation and production,” Chopra said.
Further, investments in workforce development, especially that of up-skilling professionals for advancing pharmaceutical and biotech processes would ensure India prepares the talent set to face and overcome future issues. By laying an environment rich in innovation which provides targeted aid, the budget can support the sector to scale levels that would mean long-term benefits accruing to and from the industry, he said.
Yogesh Mudras, Managing Director of Informa Markets in India also shared his insights and expectations for the pharmaceutical sector ahead of the upcoming Union Budget.
“The Indian Pharma sector has traditionally been quite strong. The sector is at the cusp of a huge transformation and is expected to reach US$ 130 billion by 2030 and US$ 450 billion market by 2047. To achieve this, we expect the upcoming budget to take policy measures to solidify India’s position at the global level and boost the sector’s capabilities for Viksit Bharat. The government should also consider expanding the list of life-saving drugs eligible for GST/import duty exemptions which will improve affordability for patients. Further, introducing additional incentives to promote investments in research and development (R&D) and promote domestic manufacturing of pharmaceutical products in India will be beneficial. Additionally, incentivising domestic API manufacturers and expanding PLI schemes will boost local production, aligning with the Make-in-India initiative. As the organisers of CPHI & P-MEC India, we are committed to fostering a thriving ecosystem for the pharmaceutical industry and look forward to policies that drive growth, innovation, and self-reliance in the sector,” Mudras emphasised.
Kinjal Shah, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA Limited said that to boost investments in the hospitals sector, tax incentives for private sector investments in modernising medical facilities and developing greenfield hospitals in rural areas is a key requirement.
“Further, given increasing medical inflation, increased allocation towards and price increases under the PMJAY scheme would also be a welcome move. Being research-intensive, the Pharma sector incurs significant spend on R&D. Investments in novel and specialty drugs are subject to higher risk of failure, leading to risk averseness. Higher tax incentives for R&D spends will incentivise Indian players to spend more, thereby providing impetus to newer research initiatives,” Shah said.
