Budget expectations: Here is what Pharmaceutical sector expects from the Union Budget 2026

The pharmaceutical industry is on the crossroads of tariff-led disruptions. Ahead of the budget, the pharmaceutical industry expects increased focus on research and monumental support to navigate through the tariff storm.

The pharmaceutical sector allocated ₹5,628 crore in the 2025 budget, up 28% YoY from the previous year’s budget in 2024. The focus was given to performance linked incentive scheme for API manufacturers and medical devices. Apart from that, ₹1,460 crore for the bulk drug park, ₹353 crore for the Jan Aushadhi Scheme and ₹150 crore for medical devices parks.

This year, the industrial body expects increased expenditure for R&D for the innovation and volume-driven pharmaceutical sector.

Indian Pharmaceutical Alliance (IPA), Secretary General Sudarshan Jain has said that the domestic pharma industry seeks globally competitive R&D incentives that align with India's innovation ambitions, enhance the scientific ecosystem, and support the transition from a volume-driven model to an innovation-led pharmaceutical sector.

He noted that with a strong track record of resilience and innovation over six decades, the industry is poised to achieve its ambitious target of reaching $120–130 billion by 2030, and ultimately $450 billion by 2047. He added that recent global challenges, such as US tariffs, supply chain disruptions, and geopolitical uncertainty, highlight the need for strategic support to sustain and strengthen India’s competitive edge.

Stressing the need for the restoration of Weighted R&D Deduction (up to 200 pc), he noted that it would significantly boost investment in novel drugs, complex generics, biosimilars, and vaccines. He said that addressing the widening inverted duty structure and ensuring smooth GST refunds on both goods and services are essential to maintain manufacturing viability and affordability. He added Incentivise Make in India, backward integration, and foreign direct investment (FDI) in pharma manufacturing.

Besides, he stated there is a need to enhance government healthcare spending towards the National Health Policy 2017 target of 2.5% of GDP by 2026–27 to strengthen the overall healthcare ecosystem. IPA represents 23 leading Indian pharmaceutical firms, including Sun Pharma, Dr Reddy's Laboratories and Zydus Lifesciences.