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The Indian pharmaceutical and healthcare industry has high expectations from the upcoming Union Budget 2025, according to a report by CareEdge Ratings. The sector is calling for increased government support to strengthen infrastructure and drive innovation.
The report highlighted the need for a 2.50 per cent-3 per cent rise in healthcare budget allocation compared to last year, emphasizing that the additional funds should focus on enhancing healthcare infrastructure, particularly in rural and semi-urban areas. It said "Increase healthcare budget allocation by 2.50 per cent-3 per cent over last year to enhance infrastructure in rural and semi-urban regions". To boost research and development (R&D) in the pharmaceutical sector, the industry is seeking the re-introduction of weighted average tax benefits. This measure, previously available, is expected to incentivize innovation and development in critical therapeutic areas. The report also highlighted the need to make healthcare services and insurance more affordable. It recommends a reduction in the GST rate on health insurance premiums from the current 18 per cent and an increase in the health insurance premium deduction limit under Section 80D of the Income Tax Act. To support pharmaceutical R&D companies, the industry suggests extending Section 115BAB, which offers lower tax rates. Additionally, increasing the budget allocation for the Production Linked Incentive (PLI) scheme is seen as vital for driving domestic manufacturing of pharmaceutical products and medical devices. Reducing customs duties on life-saving drugs and creating a robust ecosystem for domestic healthcare device manufacturers are other key recommendations. The report sheds light on the sector's robust performance in FY24, with the Indian pharmaceutical market growing by nearly 9% year-on-year to reach a size of approximately USD 54 billion. This growth was driven by a 10 per cent rise in exports and a 9 per cent increase in the domestic market, supported by higher demand for chronic therapeutic drugs and price adjustments approved by the National Pharmaceutical Pricing Authority (NPPA). Looking ahead, CareEdge Ratings predicts the industry will maintain its 9 per cent annual growth trajectory, driven equally by domestic and export markets. These reforms, if implemented, could further solidify India's position as a global pharmaceutical hub. (ANI)
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