Budget 2026: Healthcare Sector Pushes for Digital Health Funding, R&D Support & GST Rationalization

Industry stakeholders are seeking an increase in healthcare expenditure to around 3–5% of GDP, along with duty and GST rationalization, to address infrastructure gaps, affordability challenges, and workforce shortages.

With the countdown to Union Budget 2026–27 underway, India’s healthcare and pharmaceutical sector is sharpening its expectations around higher public spending, rationalized GST structures, and stronger policy support for digital health and research-driven innovation.

Industry stakeholders are seeking an increase in healthcare expenditure to around 3–5% of GDP, along with duty and GST rationalization, to address infrastructure gaps, affordability challenges, and workforce shortages.

Policy backing for preventive healthcare and digital health adoption is also emerging as a key priority ahead of the budget.

Healthcare industry body NATHEALTH has proposed the creation of a Healthcare Infrastructure Fund, a National Network of Accredited Reference Laboratories, and a national framework for ethical animal testing and pre-clinical validation of MedTech innovations.

The grouping has also sought tax deductions for preventive health check-ups to encourage early diagnosis.

“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, Joint Managing Director, Apollo Hospitals.

GST reform continues to be a major focus area for healthcare and pharma companies, with industry leaders seeking correction of inverted duty structures and a stable, predictable tax regime. There is particular emphasis on rationalizing GST on advanced medical equipment, diagnostics, and key raw materials.

Moving healthcare spending closer to 5% of GDP is essential to strengthen infrastructure and universal care delivery, says Dr. Azad Moopen, Founder and Chairman, Aster DM Healthcare.

He notes that GST 2.0 reforms, recalibrated customs duties, and streamlined regulatory pathways could support digital health and research while encouraging private investment beyond metro cities.

The pharmaceutical industry is also seeking enhanced R&D incentives and duty rationalization to strengthen domestic manufacturing and innovation.

“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.

Export competitiveness and regulatory efficiency remain key concerns for pharma manufacturers. “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.

Healthcare leaders are also highlighting the importance of preventive care and diagnostics. “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.

From a MedTech perspective, industry players are seeking incentives to reduce import dependence and strengthen domestic manufacturing under Make in India. Rationalization of GST on diagnostic services, medical equipment, and devices, along with skill development in nursing and paramedical education, is being flagged as essential to improve care delivery nationwide.

“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, Founder, Mahajan Imaging & Labs.

Industry associations are also calling for consistent execution of existing MedTech policies, simplified regulatory processes, and greater preference for domestic manufacturing in public procurement. Measures to correct inverted duty structures and incentivise higher local value addition remain central demands.

Although the GST reform of 2025 reduced taxes on diagnostic kits and medical devices to 5%, domestic manufacturers say further harmonisation is required. “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,” says G.S.K. Velu, Chairman and Managing Director, Trivitron Healthcare.

Pharma and healthcare leaders are also underlining the need to sustain momentum from previous budgets.

“Last year’s Union Budget signalled important progress toward improving patient access, particularly through duty exemptions on life-saving medicines and an increased on medical education. This progress is also reflected in the steady rise in public healthcare spending, with the share of government health expenditure in total health spending increasing over the recent years,” says Shweta Rai, Managing Director India and Country Division Head South Asia, Bayer Pharmaceuticals.

“As we look ahead to the Union Budget 2026, we hope that this momentum is sustained by strengthening policy and funding support for pharmaceutical R&D and innovation. With diseases on the rise, budgetary support for screening, diagnostics, and healthcare infrastructure will be critical to enable early diagnosis and long-term disease management. Measures that improve affordability such as rationalisation of duties and sustained public health investment can help ensure the translation of scientific progress into better patient outcomes. We look forward to the government building on these steps to further strengthen India’s healthcare ecosystem in the years ahead,” she adds.

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