Pharma & Med-tech expectations from union budget 2026: a push for manufacturing, R&D

The pharmaceutical and Med-tech sectors in India have seen tremendous growth in recent years. However, for these industries to continue to thrive and meet global demands, they need sustained policy support, manufacturing incentives, and R&D funding. The Union Budget 2026 will play a big role in shaping these industries future growth trajectory. 

The pharma and med-tech manufacturing ecosystem is looking to Union Budget 2026 to build on India’s strengths as a global supplier of medicines while reducing vulnerabilities in critical inputs and devices. Industry leaders are calling for policy support that deepens domestic manufacturing, encourages innovation, and expands access to quality healthcare across regions.​

PLI for Active Pharmaceutical Ingredients (APIs)

The Pharmaceuticals Industry has long been dependent on imports for its APIs, where around 80% of its APIs are imported from countries like China. To reduce this dependency, there is a push for expanding the PLI scheme to cover APIs. Industry bodies like the Pharmaceuticals Export Promotion Council have asked for the extension of the PLI scheme to localise API manufacturing and boost domestic production.

This move would be essential in enhancing India’s self-reliance in producing essential drugs, making the country more resilient to global supply chain disruptions.

The med-tech segment is seeking wider PLI coverage for medical devices and diagnostics, along with rationalisation of customs duties and GST on essential equipment. Industry stakeholders argue that competitive duty structures are critical for building a robust domestic manufacturing base in devices ranging from imaging and critical-care equipment to ophthalmic and diagnostic tools.​

Rationalisation of Duties on Medical Equipment

Med-tech manufacturers are expecting reduced import duties on advanced medical devices and equipment. Currently, high duties make imported medical equipment costly, halting the growth of high-end medical equipment manufacturing in India.

Industry representatives have been advocating for a reduction in import duties on these items, which would not only lower the cost of healthcare but also boost domestic manufacturing and reduce import dependency.

Infrastructure and R&D Funding for Med-tech

Medical devices manufacturing requires significant infrastructure investment and R&D funding, which continues to be a challenge in India. Experts believe that Union Budget 2026 could provide boosts to R&D funding for the Med-tech sector. The government’s continued support for home-grown innovation would enhance the competitiveness of Indian Med-tech manufacturers globally.

Pharma and med-tech companies are also asking for stronger R&D incentives, including restoration or enhancement of weighted tax deductions for research spending. Additional support for clinical research, new drug discovery, biosimilars, and advanced med-tech solutions is seen as essential for moving up the value chain.​

Outcome-oriented grants and partnerships between industry, academia, and public institutions could help accelerate innovation in areas like vaccines, complex generics, and AI-enabled diagnostic tools. Clear, long-term R&D support in the Budget would send a positive signal to both domestic and global investors in healthcare.​

Building Healthcare Infrastructure Beyond Metros

Healthcare providers are urging the government to step up investment and incentives for hospitals, clinics, and diagnostic centres in Tier 2 and Tier 3 cities. Expectations include tax benefits and financing support for setting up facilities in underserved regions to improve access and decongest metro hospitals.​

Such measures can complement existing schemes and help build a more balanced healthcare network across the country. By pairing infrastructure support with manufacturing and med-tech incentives, policy can create a more integrated healthcare ecosystem.​

Encouraging Digital Health and Preventive Care

There is growing interest in Budget support for digital-health initiatives, including telemedicine, electronic health records, and AI-led screening and diagnostics. Industry voices see digital tools as vital for improving reach and efficiency, especially in rural and semi-urban areas.​

At the same time, insurers and healthcare providers are looking for nudges that encourage preventive care and early diagnosis, which can reduce long-term treatment costs. By backing digital health and preventive care alongside manufacturing and infra, Union Budget 2026 can help strengthen both the economic and social foundations of India’s healthcare sector.

With rising health awareness and ongoing investment needs in hospitals, diagnostics, and medical technology, the Budget is seen as an important opportunity to align industrial policy with public health goals. The Pharma and Med-tech sectors are at a crucial juncture, and Budget 2026 can play important role in shaping their future. PLI expansion for APIs, duty rationalisation for medical equipment, and increased R&D funding are critical to making India a self-reliant leader in these sectors. With the right policy support, the industry can strengthen India’s global position in healthcare manufacturing and exports.