Pre-Budget Expectations: GST Simplifications Key to Pharma and Life Sciences Growth

All eyes are on the Union Budget 2026-27, to be presented on February 1, 2026, as the life sciences sector looks for decisive measures to strengthen India's position as a global hub for quality healthcare, innovation, and affordable access.

- Sanjiv Das

The Budget 2025-26 had provided a significant boost to the sector. The Department of Health and Family Welfare received Rs 95,957.87 crore, while the Department of Health Research was allocated Rs 3,900.69 crore. Additionally, Rs 20,000 crore was earmarked for the Research, Development, and Innovation (RDI) initiative. The Biotechnology Research Innovation and Entrepreneurship Development (Bio-RIDE) scheme also received Rs 2,300 crore to promote biomanufacturing, research, and entrepreneurship in novel drugs and medical devices.

However, 2025 also brought global uncertainties, including geopolitical tensions and tariff-related pressures, particularly from the US. Against this backdrop, stakeholders are seeking policy stability, tax rationalisation, and regulatory reforms to help the sector remain competitive and resilient.

GST simplification and R&D incentives

A recurring expectation across the life sciences ecosystem is simplification of the Goods and Services Tax (GST) regime, especially for pharmaceuticals and medical devices. The industry has long struggled with inverted duty structures, delayed refunds, and procedural complexities that strain working capital, particularly for MSMEs.

Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance (IPA), emphasises that the Budget must provide a strategic thrust to help the industry achieve its long-term ambitions of reaching $120 billion by 2030 and $450 billion by 2047. “Increasing healthcare spending toward the National Health Policy target of 2.5 per cent of GDP by 2026-27 is critical. Restoring weighted tax deductions for R&D, rationalising inverted GST structures, simplifying compliance for physician samples, and strengthening incentives for biopharmaceutical manufacturing will help offset current external stresses,” he says.