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Pharma industry experts eye budget boost for innovation and global ambitions

In anticipation of the upcoming Union Budget on July 23 2024, India's $50 billion pharmaceutical industry is seeking a multi-pronged government push. Industry leaders are urging policymakers to prioritise measures that incentivise research and development (R&D), strengthen domestic manufacturing capabilities, and improve logistical efficiencies. This would fuel innovation, solidify India's position as a global leader, and ensure timely deliveries of critical medications

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Dr Satish Wagh, Chairman & Managing Director, Supriya Lifescience  

“As we approach the Union Budget for 2024-25, the pharmaceutical and healthcare industry holds high expectations for continued support and facilitation from the government. The Indian pharmaceutical industry, valued at $50 billion and contributing around 1.72 per cent to the national GDP, plays a pivotal role in both domestic and global markets. Despite our industry’s impressive growth, several key areas need further attention to sustain and accelerate this progress.

 “Firstly, we anticipate measures that streamline logistic clearances from customs, as this remains a significant bottleneck. Efficient and expedited clearances can enhance our supply chain, ensuring the timely delivery of critical medications. Logistic delays currently extend by an average of 15-20 per cent, affecting our ability to meet both domestic and international demands promptly. The government’s focus on ‘Ease of Doing Business’ should extend to reducing bureaucratic hurdles in our sector.

 Furthermore, improved funding for healthcare facilities, especially in rural and semi-urban regions, is critical. India’s healthcare spending is around 3.5 per cent of GDP, which is less than the worldwide average. Strengthening basic healthcare facilities would not only enhance public health outcomes but will also increase demand for pharmaceuticals.  Incentives for research and development are another important consideration. India’s pharmaceutical R&D investment is now at 8-10 per cent of revenues, which is lower than the global average of 15-20 per cent. Enhanced tax breaks and R&D funding may drive industrial innovation, allowing us to compete worldwide and contribute to the ‘Make in India’ goals.  With the Indian pharmaceutical market projected to reach $130 billion by 2030, it is imperative that the budget supports the creation of a conducive ecosystem for cutting-edge research in pharmaceuticals. 

Lastly, we urge the government to address issues related to pricing controls and ensure a balanced approach that safeguards public interests while allowing businesses to thrive. A predictable and transparent pricing policy is crucial for sustainable growth.” 


Bhanu Prakash Kalmath S J, Partner, Grant Thornton Bharat

 “India’s domestic pharmaceutical market, valued at over $50 billion and growing at 8-10 per cent annually, is a global health powerhouse, supplying medications to over 200 countries . Rising private investments, strong M&A, and PE activity, particularly in biosimilars, CDMOs, and API businesses, reflect a positive outlook for the sector.  To solidify this position and ensure future growth, the industry looks to the upcoming budget with high expectations.

Key expectations include an enhanced outlay for the Production Linked Incentive (PLI) scheme. The current PLI allocation is approximately Rs 25,000 crore, divided among Pharmaceuticals, KSM/API, and Medical Devices. An increased PLI outlay in general and additional focus on API and Biosimilars would boost domestic manufacturing capabilities, aligning with the government’s Atmanirbhar Bharat (Self-reliant India) vision.

Additionally, the industry seeks support to encourage research and innovation. Pharmaceutical R&D is a long-term process with high uncertainty, taking 7-9 years. Although India is the third-largest producer of pharmaceutical products by volume, it ranks 14th by value. An RLI would help the sector advance in value terms. The interim budget 2024 proposed a corpus of Rs 1 lakh crore with a fifty-year interest-free loan for R&D. Although this long-term financing is focused on technology but similar programs could significantly scale up research and innovation in the pharmaceutical sector. The industry also seeks relief or simplifications regarding Section 194R to reduce the compliance burden on pharma companies, allowing them to focus on innovation and growth.

In summary, India’s pharmaceutical sector, a global leader in volume, seeks a budget boost through an enhanced PLI scheme, R&D support, and lower taxes to move up the value chain and also propel domestic production and innovation”.


Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance 

“Indian pharmaceutical industry has been instrumental in shaping global health outcomes by providing affordable, quality medicines. The industry is now at a pivotal moment, with an aspiration to grow to USD 120 billion by 2030. The policy direction should leverage the industry’s knowledge-driven foundation and the status as a global manufacturing hub. The thrust should be on Quality and Innovation. Given the high risk, lengthy development periods, and low success rates in research, continuous investment is crucial. The 2024-25 budget should introduce policies that provide direct and indirect tax benefits to encourage research and investment in becoming global benchmark in quality.”


Deepak Pahwa, Director, Delair

“The pharmaceutical industry is optimistic about the upcoming budget, especially following the government’s implementation of enhanced quality control measures like Good Manufacturing Practices and revised Schedule M. With the Indian pharma sector making significant strides globally, increased budget allocation can bolster our international standing. We anticipate initiatives incentivising R&D to support the local manufacturing of high-quality pharma products. Additionally, PLI schemes could greatly assist in establishing advanced manufacturing facilities and integrating cutting-edge technologies and machinery. These steps are vital for promoting innovation and sustainable growth within the industry.”


Hitesh Sharma, Partner and Life Sciences Leader – Tax, EY India

The life sciences sector in India has shown remarkable resilience and growth over the past years. As the 2024 financial budget announcement approaches, the sector anticipates further support and reforms to sustain its growth trajectory and enhance its global competitiveness. The following are the key areas where the sector is looking for budgetary interventions:

  • R&D incentives: Specific investments to ensure competitiveness for new chemical entities and/ or new biological entities (NBEs) and also explore providing a 200 per cent weighted deduction for companies undertaking such R&D
  • Medical devices manufacturing: To encourage innovation and investment in manufacturing, introduce a concessional tax regime and profit-linked incentives for medical device manufacturing
  • Customs duty exemptions: The sector expects a continuation or expansion of exemptions on customs duty for the import of pharmaceutical goods and life-saving drugs. The rollback of the health cess on critical medical devices is also sought to alleviate the financial burden on consumers. Lowering customs duty on imported diagnostic equipment and adjusting high GST rates on lab supplies will foster R&D investments.
  • Healthcare infrastructure: To ensure state-of-the-art infrastructure, introduce PLI for investment in healthcare infrastructure. The government should also aim to ensure the allocation of appropriate funds to this area. Addressing the shortage of healthcare workers through better training and working conditions is also essential.
  • Interactions with healthcare professionals (‘HCPs’): There are several regulations which mention interactions of companies with HCPs. Relevant clarifications should ideally be brought to provide a standard policy which can be common practice across the industry and easy to adhere to and monitor.

The life sciences sector remains optimistic that the upcoming budget will address these expectations, further strengthening India’s position as a research and innovation hub and supporting the ‘Atmanirbhar Bharat’ vision, thereby enabling it to touch $ 130 billion in value by the end of 2030 and $ 450 billion market by 2047.


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