“As India’s life sciences sector enters FY 2025, its innovation-driven growth and resilience call for supportive government reforms to sustain momentum and strengthen global leadership. Aligned with the ‘Aatmanirbhar Bharat’ vision, the sector seeks targeted initiatives to achieve its $130 billion goal by 2030.
A key demand is the reintroduction of a 200 per cent tax deduction for R&D spending, particularly for novel drugs. Boosting active pharmaceutical ingredient (API) manufacturing is another priority, requiring infrastructure development and incentives to reduce import dependency. Expanding the PLI scheme and research-linked incentives would foster API innovation and support medical device manufacturing.
Additionally, investments in AI for drug discovery, still in its nascent stage in India, hold immense transformative potential. The government must also prioritise healthcare funding by increasing spending to the 2.5 per cent GDP target set in the National Health Policy (2017) and exploring tax incentives or PLI-like schemes for healthcare infrastructure development. Reinstating a 15 per cent concessional tax rate for new manufacturers and exempting customs duties on life-saving medicines would further catalyse the sector’s growth. With strategic budgetary support, India’s life sciences sector is well-positioned to lead in innovation, affordability, and better healthcare outcomes while advancing global leadership.”
Sagar Pawar, Partner and Lead – Life Sciences & Medical Devices, KPMG in India
The Indian pharmaceutical and nutraceutical industries are calling for key budget measures to promote growth. They are seeking increased funding for research and development (R&D), tax relief, and improved infrastructure. A major focus is on reducing dependence on China for active pharmaceutical ingredients (APIs) by boosting domestic production through financial incentives and streamlined regulatory processes.
Additionally, these industries are advocating for simplified regulations, faster approval timelines, and increased support for exports and skill development. With a large section of the market comprised of MSMEs, focused measures to enable and scale their domestic business and tap into export markets are necessary. The goal of these initiatives is to enhance competitiveness and productivity while building consumer confidence in India’s healthcare sector.”
Kinjal Shah, Senior VP and Co-Group Head, Corporate Ratings, ICRA
Being research-intensive, the Pharma sector incurs significant spending on R&D. Investments in novel and specialty drugs are subject to a higher risk of failure, leading to risk averseness. Higher tax incentives for R&D spending will incentivise Indian players to spend more, thereby providing impetus to newer research initiatives.
