New Delhi [India]: The Indian pharmaceutical and healthcare sector is optimistic about significant measures in the upcoming Union Budget 2025. A report by CareEdge Ratings highlights key industry demands, including increased funding for infrastructure and incentives to drive innovation.
The report emphasizes the need for a 2.50-3 per cent increase in healthcare budget allocation, with a focus on improving infrastructure in rural and semi-urban areas. “Increase healthcare budget allocation by 2.50 per cent-3 per cent over last year to enhance infrastructure in rural and semi-urban regions,” it stated.
To encourage innovation, the industry is calling for the re-introduction of weighted average tax benefits for research and development (R&D), an incentive that previously played a significant role in advancing pharmaceutical research, particularly in critical therapeutic areas.
The report also highlights the importance of making healthcare services and insurance more affordable. Key recommendations include:
- Reducing the GST rate on health insurance premiums from the current 18 per cent.
- Increasing the health insurance premium deduction limit under Section 80D of the Income Tax Act.
For pharmaceutical R&D companies, the sector proposes extending Section 115BAB (lower tax rates) and boosting the budget for the Production Linked Incentive (PLI) scheme to enhance domestic manufacturing of drugs and medical devices. Additionally, reducing customs duties on life-saving drugs and fostering a supportive ecosystem for domestic healthcare device manufacturers are seen as crucial steps.
The Indian pharmaceutical market showed strong performance in FY24, growing by nearly 9 per cent year-on-year to approximately USD 54 billion. This growth was driven by a 10 per cent surge in exports and a 9 per cent rise in domestic demand, supported by higher demand for chronic therapeutic drugs and price adjustments approved by the National Pharmaceutical Pricing Authority (NPPA).
Looking ahead, CareEdge Ratings predicts the sector will continue to grow at an annual rate of 9 per cent, supported by both domestic and export markets. These reforms, if implemented, could cement India’s position as a global pharmaceutical hub.