As the Union Budget 2025 approaches, India's pharmaceutical industry anticipates announcements for key measures to bolster its growth and reduce external dependencies. Recognized as the world's third-largest by volume and 14th by value, the sector aims to reach a market size of USD 120–130 billion by 2030 and USD 450 billion by 2047.

A significant focus is on amplifying research and development (R&D) investments. Currently, the Indian pharma industry allocates approximately 8.4 percent of its total sales to R&D, trailing the global average of 10–11 percent.

The industry is also focusing on reducing dependence on Chinese imports for Active Pharmaceutical Ingredients (APIs). Strategies include bolstering domestic manufacturing capabilities and investing in infrastructure to support API production. This move aims to enhance self-reliance and ensure a stable supply chain.

The forthcoming Union Budget 2025 presents a pivotal opportunity for the Indian pharmaceutical sector to address existing challenges and pave the way for sustainable growth. By focusing on R&D incentives, tax reforms, and reducing import dependencies, the industry aims to strengthen its global standing and contribute significantly to the nation's economy.

Pharmaceutical Industry Experts Take on Upcoming Budget 2025

Expressing his views on the same, Nirav Mehta, Managing Director & CEO, CORONA Remedies, said, “The upcoming Union Budget, for the year 2025–26 presents a chance to align priorities with the evolving pharmaceutical landscape in India. We are eager to see how the budget aims to boost the industry through policy adjustments that play a vital role in fostering sustainable growth and ensuring widespread availability of essential medications nationwide. Moreover, it is crucial for the government to prioritize boosting investments in research and development (R&D). With strategies and initiatives in place India has the potential to solidify its position as a hub, for innovative products and environmentally friendly pharmaceutical production.”

“The Indian pharmaceutical industry anticipates Budget 2025 to introduce transformative measures that drive innovation, manufacturing, and export competitiveness. While previous budgets have laid a strong foundation with initiatives like Production Linked Incentive (PLI) schemes and an increased R&D focus, the industry now looks forward to policies that further align with India’s ambition of becoming a USD 130B pharma market by 2030. This year’s expectations revolve around incentivizing research, streamlining taxation frameworks, and fostering regulatory ease to bolster the sector’s growth and resilience in an evolving global landscape. India currently lags in drug development. To tackle this, the government has outlined a 10-year plan to develop 16 APIs and 2 KSMs sustainably and cost-effectively. To further solidify India's global leadership in the pharmaceutical sector and to further India’s goal of API self-reliance, the industry expects increased government investment into drug development parks, research institutes and fostering academia-industry ties. The industry expects for the establishment of a single, centralized regulatory authority ensuring alignment with global standards and fostering ease of doing business. We expect the government to introduce additional tax deductions, such as 1.25x for expenditures on training and skill development initiatives. The pharmaceutical industry urges the government to extend the sunset date for the concessional 15 percent tax rate, enabling companies to sustain local manufacturing growth under the "Make in India" initiative. Additionally, the sector seeks clear guidelines to classify free drug samples and promotional materials valued below INR 1K as deductible marketing expenses. The industry also calls for definitive clarifications affirming Input Tax Credit (ITC) eligibility for legitimate business expenses, particularly those related to medical practitioners. The current ambiguity often leads to liquidity constraints and prolonged tax disputes, impacting operational efficiency. Furthermore, aligning GST rates for APIs (currently 18 percent) with those of finished formulations (12 percent or 5 percent) is crucial to resolving ITC accumulation, improving cash flow, and streamlining credit refunds for manufacturers,” commented Garima Malhotra, Associate Partner, Healthcare and Lifesciences, Praxis Global Alliance.

“Pharmaceutical infrastructure in India is facing significant gaps, limiting the growth of manufacturing and research capabilities. The industry expects the budget to address these challenges by prioritizing long-term financing solutions, including tax incentives, extended loan repayment periods, public-private partnerships, and the establishment of dedicated innovation zones. Additionally, investments in setting up manufacturing hubs, research facilities, and logistics networks in tier 2 and 3 cities are essential to enhance production efficiency and drive the growth of the pharmaceutical industry in India,” added Malhotra.