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Pharma, biotech sectors ask govt to restore weighted R&D incentives to save India’s innovation edge
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Nandita Vijayasimha, Bengaluru
January 15 , 2026
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India’s pharmaceutical and biotechnology industry has stepped up pressure on the government ahead of the Union Budget 2026, calling for the immediate restoration of weighted tax deductions on research and development spending, informing that the absence of meaningful fiscal incentives is eroding the country’s innovation edge and weakening its global competitiveness in drug discovery and advanced biotechnology.
Ritesh Shah, joint managing director, Anuh Pharma said that the Budget 2026 comes at a time when the pharmaceutical industry is transitioning from being a cost-efficient producer to a strategic pillar of India’s healthcare and economic growth. The industry does not expect any major announcements on direct or indirect taxes, given the substantial rationalisation undertaken in recent years.
Instead, the focus is on calibrated, sector-specific interventions that enhance competitiveness and sustainability. India’s pharmaceutical sector contributes nearly 6% of total merchandise exports and around 1.7–2% of GDP, making it a strategically vital industry. Beyond these numbers, pharmaceuticals will play a central role in India’s future growth, particularly in biotechnology, medical devices, active pharmaceutical ingredients (APIs) and the broader goal of self-reliance and global supply chain leadership, he added.
The industry’s key five-pointer expectations from Budget 2026 include rationalisation of GST and correction of inverted duty structures on raw materials, medicines and medical devices, along with targeted customs duty relief. Second is restoration of weighted R&D deductions and stronger fiscal support for innovation in complex generics, vaccines and biopharma which is also critical, said Shah.
Third is the extension of the PLI scheme, supported by MIP (Minimum Import Price) and anti-dumping measures. Fourth is additional higher public healthcare spending, as nearly 65% of the population face inadequate quality medical infrastructure access. Fifth is targeted incentives for pharma SMEs to comply with the revised Schedule M, through capital subsidies and soft financing, said Shah.
Noting that as India builds its ambition to become a global hub for next-generation biotherapies, Amit Mookim, Board of Director and CEO, Immuneel Therapeutics said the Union Budget 2026–27 can play a defining role in improving access, affordability and innovation in cell and gene therapy. Broader rationalisation of GST on manufacturing materials and targeted import duty relief on critical raw materials will be key to lowering production costs and expanding patient access. Creation of insurance frameworks that recognise the long-term value of potentially curative, one-time treatments such as CAR-T cell therapy will also be crucial. Innovative financing mechanisms, including outcome-based and annuity-style payment models, will align affordability with sustainability for patients. Incentivising global technology partnerships will accelerate knowledge transfer, co-development, and localisation of globally benchmarked therapies in India.
Dr. Shafiq A M, co-founder and CEO, TriLife Hospital, pointed out that the real opportunity for this year’s Union Budget lies in shifting the healthcare conversation from expansion alone to intelligent strengthening of care delivery. While increased public spending is important, equal focus is needed to ensure healthcare reaches patients across the country. This can be achieved by incentivising small and mid-sized hospitals, particularly in urban peripheries and tier-2 cities, which would ease the burden on overstretched tertiary care centres while improving access and patient outcomes.
Alongside affordable pricing, faster regulatory clearances and stronger policy support for domestically manufactured medical technology will enable hospitals to deliver advanced care without increasing costs for patients. Overall, a budget that prioritises operational efficiency, affordability and technology will not only improve patient trust but also create a sustainable healthcare ecosystem capable of meeting India’s growing clinical demands, said Dr Shafiq.
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