Union Budget 2025-26: A roadmap for India’s pharmaceutical leadership

The Union Budget 2025-26 represents an opportunity for India to recalibrate policies that will drive the pharmaceutical sector forward as it approaches significant economic and industrial growth. India’s pharmaceutical industry is poised for transformative growth thanks to its ability to supply affordable medicines worldwide. However, to maintain its leadership role and ensure sustained contributions to both domestic healthcare and global supply chains, several critical reforms are needed.

A strong pharmaceutical ecosystem relies heavily on research and development (R&D). The Indian pharmaceutical sector is loaded with talent and has made great strides in generic medicine development. However, massive R&D expenditure is necessary to drive the next generation of discoveries. It is therefore essential that the government revisits the 200 per cent weighted tax benefit on R&D spending in order to encourage more pharmaceutical companies to invest in innovative research. Moreover, a dedicated National Life Sciences Fund with a 10 per cent allocation for high-impact pharmaceutical research can provide much-needed financial assistance for cutting-edge discoveries.

Similarly, India’s regulatory framework has evolved, but there is still room for improvement, especially in terms of speed and transparency. For pharmaceutical companies to innovate and expand, India should establish a unified regulatory authority that streamlines the approval process for drugs and medical devices. As a result of digitising and simplifying the approval process for new medications, including the introduction of clear guidelines for the approval of refurbished medical devices, delays would be reduced and costs would be reduced for both manufacturers and consumers.

In recent years, India’s manufacturing sector has enjoyed growth, especially under initiatives such as the Production Linked Incentive (PLI). Nevertheless, to further reduce the nation’s dependence on imports, particularly for critical active pharmaceutical ingredients (APIs), expanding the scope of the PLI scheme to include APIs and intermediates is crucial. The government should also incentivise the adoption of green manufacturing technologies. The shift to environmentally sustainable production practices, combined with the extension of tax breaks on investments in modern manufacturing facilities, will enhance competitiveness and sustainability.

India’s pharmaceutical industry is a global leader, with exports accounting for a significant portion of its revenue. However, to maintain and expand this position, the government must improve the country’s intellectual property (IP) policies. Introducing measures such as Patent Term Extensions (PTE) and Data Exclusivity (DE) would align India’s IP regulations with international standards and reassure global investors. By doing so, India could build stronger partnerships in emerging and established markets alike.

In Conclusion, the Union Budget 2025-26 presents a key opportunity to boost India’s pharmaceutical sector. Focused reforms in R&D, regulatory efficiency, and manufacturing can unlock its full potential, strengthening India’s leadership in global healthcare.