Budget 2026: Healthcare Seeks R&D Boost, GST Relief, Cheaper Meds - Whalesbook

WhalesbookJanuary 20, 2026

India's healthcare industry is lobbying for significant Budget 2026 allocations, prioritizing R&D funding, startup support, and GST reforms. Key players like Dr. Reddy's and Poly Medicure are pushing for policies to bolster domestic manufacturing, boost exports, and manage global challenges like tariffs. Focus on innovation and cost-effective treatments is paramount.

R&D and Innovation Push

The Indian pharmaceutical sector is poised for significant growth, with ambitions to reach $120-130 billion by 2030. However, global challenges such as trade tariffs and supply chain disruptions necessitate a stronger domestic R&D framework. Industry leaders advocate for structured funding to transform advanced research into high-value therapies and complex generics, moving towards a more innovation-led model.

GST Reforms for Manufacturing

Manufacturers, particularly in the medical devices segment, are grappling with GST inversion. Poly Medicure points out that a 5% tax on finished devices contrasts sharply with an 18% duty on inputs, leading to substantial input tax credit accumulation and working capital pressure. Aligning job-work GST rates with the pharmaceutical sector's 5% and revising refund formulas to include input services and capital goods are critical demands.

Child Welfare and Preventive Health

Concerns over child welfare spending persist, with a noted slip in its share of GDP despite a marginal rise in the Union Budget allocation. Expanding postgraduate training positions in paediatrics and increasing tax deductions for essential child check-ups are key proposals. Furthermore, with non-communicable diseases projected to cause 75% of mortality by 2030, a pivot towards preventive healthcare, including strengthening diagnostics and creating an NCD resilience fund, is deemed essential.

Digital Health and AI Integration

The integration of Artificial Intelligence (AI) into healthcare is seen as crucial for early diagnosis and treatment. Companies like Philips are urging for incentives that prioritize AI-driven innovations. The development of a sustainable MedTech manufacturing ecosystem, supported by Production-Linked Incentive (PLI) schemes, is also a priority to establish India as a global export hub.