Budget 2026 Expectations: Pharma & Med-Tech Seek Strategic Policy Support
Pharmaceutical and medical technology companies are pressing the government for significant policy changes in the upcoming Union Budget 2026. Key demands include extending the Production-Linked Incentive (PLI) scheme to cover Active Pharmaceutical Ingredients (APIs), restoring weighted deductions for research and development (R&D), and rationalizing import duties on critical medical equipment. This push aims to bolster domestic manufacturing, encourage healthcare innovation, and improve patient access to advanced treatments across India.
API Security and R&D Incentives
The Indian Pharmaceutical Alliance (IPA) is advocating for the extension of PLI schemes to API production. Sudarshan Jain, IPA secretary general, emphasized that recent global disruptions highlight the need for self-sufficiency in critical drug components. He also called for restoring the 200% weighted deduction for R&D expenditures, which he believes will spur investment in novel drugs, complex generics, biosimilars, and vaccines.
Addressing Duty Structures
The industry faces challenges with an inverted duty structure, where finished goods are taxed lower than their inputs, creating working capital pressures. Jain noted the importance of smooth Goods and Services Tax (GST) refunds on both goods and services to maintain manufacturing viability. Himanshu Baid of Poly Medicure Ltd. specifically requested aligning job-work GST rates for medical devices with the pharmaceutical sector's 5% concessional rate and revising refund formulas to include input tax credit (ITC) on services and capital goods.
Medical Device Affordability
Pavan Choudary, chairman of the Medical Technology Association of India (MTaI), pointed out that approximately 70% of medical devices used in India are imported. He argued that high customs duties and taxes on these devices, among the highest globally, directly impact patient affordability. Choudary urged a reduction in customs duty to 2.5% for medical devices where domestic substitutes are not yet readily available.
Innovation and Domestic Manufacturing
Ameera Shah, president of NATHEALTH, highlighted the rapid rise of non-communicable diseases in India and proposed a long-term affordable financing mechanism. This could involve earmarking a portion of the health cess and corporate social responsibility (CSR) obligations for a dedicated fund. Rajiv Nath of AiMeD called for increased tariffs (10-15%) to support domestic manufacturing, preferential procurement of domestically certified devices (ICMED) over foreign approvals, and incentives for local value addition. Industry projections see India's pharma sector reaching $120-130 billion by 2030 and $450 billion by 2047.