Union Budget 2026-27: Healthcare sector presses for policy depth over spend hikes

As the Union Budget 2026 approaches, healthcare leaders across pharmaceuticals, hospitals, diagnostics and medical technology 
have flagged the need for policy choices that go beyond annual allocations and address structural pressures across the system. An ageing population, a rising chronic disease burden, dependence on imported equipment, and uneven access outside large cities are shaping expectations that this year’s Budget must address how care is delivered, financed, and sustained.

India’s healthcare needs are expanding in tandem with its growing demographics. Government population estimates place India’s population at over 1.4 billion, while data from the Ministry of Health and Family Welfare show that non-communicable diseases now account for more than 60% of all deaths in the country. The Economic Survey and assessments by NITI Aayog have repeatedly highlighted that demand for long-term treatment, diagnostics and specialised care is rising faster than capacity, particularly outside metropolitan centres. At the same time, public healthcare spending remains at around 2–2.2% of GDP, according to government budget documents, well below levels seen in several middle-income economies.

Industry leaders have argued that Budget 2026 should treat healthcare as an economic priority rather than a discretionary spend. 

“Moving healthcare spending closer to 5% of GDP is essential to address infrastructure, affordability and workforce gaps,” said Dr 
Azad Moopen, Founder and Chairman of Aster DM Healthcare, adding that such a move would support a more resilient and universal care framework as India works towards its 2047 development goals.

Spending under strain

Moopen pointed to recent tax changes as a starting point rather than an endpoint. He noted that GST 2.0, rolled out in 2025, reduced the tax burden on essential medicines and exempted individual health and life insurance from GST. “The next phase must focus on preventive health coverage, rationalised GST on advanced equipment and diagnostics, and recalibrated customs duties on medical technologies,” he said, arguing that incentives for private investment in Tier-2 and Tier-3 cities and research-led enterprises are critical as care becomes more complex and geographically dispersed.

Pressures linked to ageing have also entered the Budget discussion. Projections from the Ministry of Statistics and Programme Implementation indicate that India will have more than 190 million people aged over 60 by 2030, increasing demand for eye care, mobility support and chronic disease management. Sanjay Bhutani, Director at the Medical Technology Association of India, said longer life expectancy must translate into healthier years. “Eye health needs to be treated as core primary care, not as a discretionary expense,” Bhutani said, pointing to cataract as a leading cause of avoidable blindness, particularly among older adults in rural and lower-income households, as reflected in National Programme for Control of Blindness data.

Import reliance draws attention

Domestic manufacturing has emerged as another area of concern ahead of the Budget. Government submissions to Parliament and reports by NITI Aayog indicate that around 70–80% of advanced medical devices used in India are imported. Vipul Jain, CEO of CK Birla Hospitals, said hospitals remain heavily dependent on overseas suppliers for imaging systems, surgical platforms and other critical equipment, even as clinical demand rises.

“If similar equipment were manufactured at scale in India, costs could eventually be materially lower, much like what the automotive sector has demonstrated,” he said, adding that local production would also improve supply reliability and service support.

From the pharmaceutical sector, attention has centred on policy continuity and follow-through. Bhavin Mehta, Whole Time Director at Kilitch Drugs and Vice Chairperson of Pharmexcil, said schemes such as the Production Linked Incentive programme and PRIP had created momentum, but execution now needed closer attention.

“The next phase must focus on scale, execution and global cost competitiveness,” Mehta said, calling for rationalised import tariffs on critical raw materials, stronger tax incentives for R&D and easier access to export credit as compliance and input costs rise.

Industry leaders have also flagged the cost of policy uncertainty. Sanjaya Mariwala, Executive Chairman and Managing Director of OmniActive Health Technologies, said frequent changes in incentives and duty structures complicate long-term planning. “Large investments are planned over five to seven years, but when policies change every Budget, companies are forced to keep adjusting their plans,” he said, referring to delays in incentive disbursements under flagship schemes as an execution issue rather than a lack of intent.

Early diagnosis moves up agenda

Diagnostics, which inform a majority of clinical decisions, face their own structural challenges. Government data and industry submissions have highlighted the inverted duty structure, under which importing finished diagnostic products can be cheaper than sourcing components locally. Dr Anand K, Managing Director and CEO of Agilus Diagnostics, said this “weakens domestic manufacturing and limits value creation,” adding that balanced tax structures and consistent R&D incentives are needed as diagnostics adopt advanced technologies, including AI-enabled tools.

Beyond allopathic care, some leaders have highlighted the role of evidence-backed traditional medicine in reducing long-term costs. Rajiv Vasudevan, Managing Director and CEO of Apollo AyurVAID, said sustained investment in clinical research and structured public–private collaboration is required to include proven Ayurveda interventions under schemes such as Ayushman Bharat–PMJAY, particularly for chronic care and lifestyle-linked conditions.

Multinational drugmakers operating in India have also framed Budget 2026 as an opportunity to strengthen the full patient pathway. Annapurna Das, General Manager at Takeda India, said “continued public investment in screening, diagnostics and referral pathways can help reduce delays in complex disease areas such as cancer and rare diseases,” while easing the out-of-pocket burden on families, which government estimates place at close to half of total healthcare expenditure.