Budget 2026: Pharma, med-tech companies seek PLI extension to cover APIs

NEW DELHI: Pharmaceutical experts and the medical technology sector are seeking extension of the production-linked incentive (PLI) scheme to cover active pharmaceutical ingredients (APIs). They also expect the government to provide structured support for healthcare innovation and to rationalise duties on advanced cancer radiation equipment, making them more accessible in areas beyond major cities.

The industry expects the government to address these issues in the Union budget announcement this year.

Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance (IPA) said the recent global challenges like US tariffs, supply chain disruptions and geopolitical uncertainty have underscored the need for strategic support, and hence, restoring 200% weighted deduction for research and development expenditures would be a significant step.

“Measures like restoration of weighted R&D deduction up to 200% will significantly boost investment in novel drugs, complex generics, biosimilars and vaccines,” Jain said.

The industry is also seeking government intervention in addressing the issue of widening inverted duty structure, ensuring smooth GST refunds on both goods and services, to maintain manufacturing viability, Jain said.

According to industry estimates, India’s pharma industry could touch $120-130 billion by 2030, and $450 billion by 2047.

Ameera Shah, president of NATHEALTH and promoter and executive chairperson of Metropolis Healthcare Ltd., said that with non-communicable diseases having risen rapidly in India, there’s a need for long-term affordable financing, and that a fund could be created for this by earmarking a portion of the health cess and universal CSR obligations.Industry experts have urged the government to lower customs duty on medical devices, saying that it will provide relief to patients.

“As per data, around 70% of medical devices used in India are imported. Meanwhile, the custom duties and taxes levied on medical devices in India are one of the highest in the world and highest among the neighbouring countries,” said Pavan Choudary, chairman of the Medical Technology Association of India (MTaI). “This directly impacts patient affordability and is contradictory to the government’s objective of enhancing access to quality healthcare for all. For products where the ability to import a substitute is still some time away, the high customs duty should be reduced to 2.5% on medical devices.”

Himanshu Baid, managing director of Poly Medicure Ltd., said, “Aligning the job-work GST rate for medical devices with the concessional 5% applied in the pharmaceutical sector and revising the refund formula to include ITC on input services and capital goods would offer immediate relief and bring greater parity.”

Baid said the resulting inverted duty structure, where many finished devices are taxed at 5% while most inputs and input services attract 18%, will lead to large input tax credit accumulations and increased working-capital pressures for manufacturers. “Addressing this imbalance is essential,” he said.

According to Rajiv Nath, forum coordinator, AiMeD, the industry is also looking for an increase in tariffs to 10-15% to support domestic manufacturing, adoption of ICMED (Indian Certification for Medical Devices) in procurement over foreign approvals, change in labelling norms to disclose domestic content, and incentivising suppliers with over 50% local value addition.