Union Budget 2025: Pharmaceutical Sector Seeks Increased Budget Allocation

The Indian pharmaceutical and healthcare industry is eagerly anticipating the upcoming Union Budget 2025, with a strong focus on government support for infrastructure development, research and development, and affordability.

Key Expectations:

Increased Healthcare Budget Allocation: The industry is calling for a substantial increase in the healthcare budget allocation, ideally by 2.50-3% compared to the previous year. This additional funding should be primarily directed towards enhancing healthcare infrastructure, particularly in rural and semi-urban areas.

Boosting Pharmaceutical R&D: Re-introduction of weighted average tax benefits is crucial to incentivize innovation and development in critical therapeutic areas.

Improving Healthcare Affordability: Reduction in the GST rate on health insurance premiums from the current 18%. Increase in the health insurance premium deduction limit under Section 80D of the Income Tax Act.

Supporting Pharmaceutical R&D Companies:Extension of Section 115BAB, which offers lower tax rates. Increased budget allocation for the Production Linked Incentive (PLI) scheme to drive domestic manufacturing.

Reducing Customs Duties: Lowering customs duties on life-saving drugs.

Strengthening Domestic Healthcare Device Manufacturing: Creating a robust ecosystem for domestic healthcare device manufacturers.

Industry Performance: The Indian pharmaceutical market demonstrated robust growth in FY24, expanding by nearly 9% year-on-year to reach approximately USD 54 billion. This growth was driven by a significant increase in exports and a robust domestic market.

CareEdge Ratings predicts that the industry will maintain its 9% annual growth trajectory, driven by both domestic and export markets. The successful implementation of the aforementioned reforms could further solidify India's position as a global pharmaceutical hub.

The Union Budget 2025 holds significant implications for the future of the Indian pharmaceutical and healthcare industry. By addressing the key concerns and implementing the proposed measures, the government can foster a more robust and innovative healthcare ecosystem in the country.