Pharma Industry Demands Budget Boost for R&D and Regulatory Clarity
Overview
Indian pharmaceutical industry bodies are urging the government to introduce significant R&D incentives and fiscal support in the upcoming Union Budget 2026-27. They also seek GST rationalization and a simplified regulatory framework to help the sector achieve its ambitious $130 billion growth target by 2030 and maintain global competitiveness amid supply chain uncertainties.
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Budget 2026-27: Pharma Industry Seeks Key Reforms
The Indian pharmaceutical sector is pressing for substantial policy support in the forthcoming Union Budget 2026-27, aiming to propel its growth towards a $130 billion valuation by 2030. Industry associations Indian Pharmaceutical Alliance (IPA) and Organisation of Pharmaceutical Producers of India (OPPI) have outlined a series of critical demands focused on research and development, fiscal incentives, and regulatory streamlining.
Driving Innovation Through R&D Incentives
Central to the industry's appeal is the call for globally competitive R&D incentives and fiscal support for clinical research. The IPA highlighted the need to restore the weighted R&D deduction, which they propose should be as high as 200 percent. Such measures, they argue, will significantly boost investment in novel drugs, complex generics, and vaccines, facilitating a crucial shift from a volume-driven model to one centered on innovation.
GST Rationalization and Compliance Ease
Industry stakeholders also demand a rationalization of the Goods and Services Tax (GST) structure. This includes addressing the inverted duty structure and ensuring seamless GST refunds for both goods and services to maintain manufacturing viability and affordability. OPPI specifically requested clarity on input tax credits and targeted customs duty relief for critical raw materials and advanced manufacturing inputs.
Streamlining Regulatory Framework
Simplifying the complex web of licenses and compliances is another key demand. Deloitte India suggested forming a single, unified regulatory authority for both pharmaceuticals and medical devices. Such a move, they contend, would significantly promote ease of doing business and attract greater investment into the sector by creating a more predictable and streamlined framework.
Strengthening Healthcare Ecosystem
Beyond direct industry support, the IPA urged an increase in government healthcare spending, targeting the National Health Policy's goal of 2.5 percent of GDP by 2026-27. This, they believe, is essential for strengthening the overall healthcare ecosystem and supporting the sector's long-term objectives, including reaching potential valuations of $450 billion by 2047.
