Indian Pharma & Health Sector Eyes Ambitious Reforms in 2025 Union Budget

The Indian pharmaceutical and healthcare industry anticipates substantial government support through increased budget allocations in the 2025 Union Budget, focusing on infrastructure development and innovation. Key proposals include reintroducing tax benefits for R&D, reducing GST on health insurance, and boosting domestic manufacturing through the PLI scheme.

The Indian pharmaceutical and healthcare sectors have high hopes for significant reforms in the Union Budget 2025, according to CareEdge Ratings. The industry is advocating for substantial government backing, aiming to bolster infrastructure and foster innovation.

A proposed 2.50 to 3 percent increase in healthcare budget allocation aims to enhance infrastructure, especially in rural and semi-urban regions, the report indicates. Reintroducing weighted average tax benefits for pharmaceutical R&D is suggested to energize advancements in crucial therapeutic areas.

To make healthcare services and insurance more accessible, the report calls for reducing the GST on health insurance premiums from 18 percent and increasing the deduction limit under Section 80D of the Income Tax Act. The sector also suggests extending Section 115BAB to benefit R&D companies and increasing funds for the Production Linked Incentive (PLI) scheme to boost domestic production of pharmaceuticals and medical devices.

Highlighted recommendations include cutting customs duties on life-saving drugs and building a thriving domestic healthcare device manufacturing ecosystem. The industry's strong performance in FY24, marked by a 9 percent growth in the Indian pharmaceutical market, underscores these reforms' potential impact.

CareEdge Ratings maintains a positive outlook, predicting a continued 9 percent growth in the industry, fueled by domestic and export markets. Implementing these reforms could reinforce India's status as a global pharmaceutical leader.

(With inputs from agencies.)