India has steadily earned its reputation as the “Pharmacy of the World”, supplying affordable, high-quality medicines to both domestic and global markets. As the Union Budget 2026 approaches, expectations are high from policymakers to further strengthen the pharmaceutical and life sciences sector—especially in terms of affordability, innovation, and global competitiveness.
According to recent industry estimates, the Indian pharmaceutical market reached nearly USD 55 billion in 2025 and is projected to grow to USD 120–130 billion by 2030. This growth trajectory highlights the urgent need for targeted budgetary reforms that can reduce manufacturing costs, boost innovation, and attract long-term investments without compromising medicine quality.
The Role of Budget 2026 in Pharma Sector Growth
The Indian life sciences sector has demonstrated remarkable resilience over the past few years despite global supply chain disruptions, rising input costs, and regulatory pressures. However, sustaining this momentum will require strategic fiscal support.
Key budget expectations from the pharma industry include:
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Lower cost of capital
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Incentives for research and development
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Support for technology-driven innovation
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Measures to make medicines more affordable for the masses
To achieve these goals, the Union Budget 2026 can play a transformative role.
Making Medicines More Affordable Without Compromising Quality
Affordability remains a central pillar of India’s pharma leadership. However, rising raw material costs, energy prices, and compliance expenses directly impact drug pricing.
Budget-led solutions may include:
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Tax incentives for bulk drug and API manufacturers
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Rationalisation of GST on essential medicines
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Subsidised power and infrastructure support for pharma clusters
Such measures would enable manufacturers to optimise production costs while maintaining stringent quality standards, ultimately benefiting patients across India.
Boosting Foreign Investment Through Tax Reforms
To maintain India’s attractiveness as a global pharma manufacturing hub, experts suggest extending the sunset clause for concessional tax rates on foreign borrowings. This would help companies access cost-effective overseas funding.
Additionally, introducing a 150% weighted deduction on interest paid to foreign lenders could:
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Reduce overall borrowing costs
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Encourage foreign direct investment (FDI)
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Strengthen India’s position in global pharma supply chains
Lower-cost capital would especially benefit mid-sized and emerging pharma players looking to scale operations.
Innovation and R&D: The Next Growth Engine
Innovation is no longer optional—it is essential for long-term competitiveness. The NITI Aayog discussion paper has already highlighted the need to redefine India’s R&D ambitions and improve their real-world impact.
Expected Budget Interventions for R&D:
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Research-linked incentive schemes covering full R&D expenditure
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Government-backed grants for disease areas relevant to Indian populations
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Increased funding for clinical research and bio-pharma innovation
Targeted support in priority disease segments such as diabetes, cardiovascular disorders, infectious diseases, and oncology could significantly improve healthcare outcomes.
Technology Adoption Across the Pharma Value Chain
Beyond R&D, investment in digital technologies, automation, and AI-driven analytics is rising across manufacturing, sales, and marketing functions. Budgetary incentives for technology adoption can improve productivity, compliance, and global competitiveness.
Support for advanced manufacturing facilities will also strengthen India’s ecosystem of pharma contract manufacturing company models, enabling brands to scale faster while maintaining regulatory compliance and cost efficiency.
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Encouraging Domestic Manufacturing Under Atmanirbhar Bharat
India’s Atmanirbhar Bharat vision places strong emphasis on self-reliance in pharmaceuticals. Budget 2026 can reinforce this by:
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Expanding Production Linked Incentive (PLI) schemes
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Supporting MSME pharma manufacturers
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Encouraging domestic formulation and finished dosage exports
Such initiatives will also create opportunities for companies operating as a monopoly medicine company in India, where exclusive product rights and territory-based models help strengthen distribution networks.
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Conclusion: Budget 2026 as a Catalyst for Pharma Leadership
The Union Budget 2026 holds the potential to redefine India’s pharmaceutical future. By focusing on affordability, innovation, investment-friendly policies, and domestic manufacturing strength, the government can ensure sustainable growth of the sector.
Strategic fiscal interventions will not only make medicines more affordable for Indian citizens but also reinforce India’s leadership as a trusted global pharma supplier. With the right balance of incentives and reforms, India can accelerate its journey toward becoming a global pharmaceutical innovation and manufacturing powerhouse.
Source: ET Pharma News