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Budget 2026-2027 – Healthcare at the forefront
The healthcare and pharmaceutical sector took centerstage on February 1, 2026, as Hon’ble Finance Minister, Ms. Nirmala Sitharaman announced the Union Budget for 2026-27 (“Budget”), allocating INR 1,06,530.42 crore (Indian Rupees one lakh six thousand five hundred and thirty point four two crore) to the Ministry of Health and Family Welfare. The emphasis on fostering greater innovation and increasing patient welfare in the budgetary announcements are a clear marker of the Government of India’s (“Government”) continued commitment to the ‘Viksit Bharat’ vision.
Greater outlay, greater welfare
India’s flagship public healthcare scheme, the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (“AB PM-JAY”) has been allocated INR 9,500 crore (Indian Rupees nine thousand five hundred crore), up from INR 9,000 crore (Indian Rupees nine thousand crore) in financial year 2025-26. The enhanced allocation aims to expand beneficiary coverage, following a significant increase in the scheme’s footprint, with over 15,00,00,000 (fifteen crore) unorganised gig workers benefiting from AB PM-JAY in December 2025. For further bridging the divide between the public health services in rural India and urban India, especially in material and child health services and bettering disease control intervention, a budget of INR 39,390 crore (Indian Rupees thirty-nine thousand three hundred and ninety crore) has been allocated to the National Health Mission.
Future-proofing India’s biopharma manufacturing capabilities
At the core of the indigenous manufacturing initiatives of the Government was the announcement of ‘Biopharma SHAKTI’. With a planned outlay of INR 10,000 crore (Indian Rupees ten thousand crore) over the span of 5 (five) years, the initiative aims to make build a self-sufficient domestic supply chain and ecosystem of biologics and biosimilars, reducing import dependence and catapulting India as a biopharma manufacturing hub of the future.
Through ‘Biopharma SHAKTI’, the Government will start by expanding the number of National Institutes for Pharmaceutical Education and Research (“NIPER”) to 10 (ten), adding to and upgrading the current 7 (seven) NIPERs throughout the country and setting up 3 (three) new institutes. For ramping up clinical research innovation and output, a network of 1,000 (one thousand) accredited clinical trial sites is proposed to be set up. Inducting scientific and technical personnel specialising in biopharma in the Central Drugs Standard Control Organisation (“CDSCO”) is also a key measure focusing on accelerating biopharma evaluations and approval timelines and platforming the CDSCO to match global regulatory standards.
Boost for health infrastructure
The most significant policy beneficiary of the Budget is by far the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission. The INR 4,770 crore (Indian Rupees four thousand seven hundred and seventy crore) allocation, a 71.9% increase from financial year 2025-26, is intended to plug the current shortfall in the construction targets of Ayushman Arogya Mandir, block public health units, and growing the current district level integrated public health laboratories and critical care hospital blocks. Pertinently, the infrastructure upgradation requirement of central hospitals has also been addressed through a raised allocation of INR 4,599.06 crore (Indian Rupees four thousand five hundred ninety-nine point zero six crore).
Strengthening medical institutions
The Pradhan Mantri Swasthya Suraksha Yojana, the Government’s long-standing schemes geared towards establishing more All India Institute for Medical Sciences (“AIIMS”) and upscaling tertiary care facilities in Government medical colleges, saw an increased allocation of INR 11,307 crore (Indian Rupees eleven thousand three hundred and seven crore). Additionally, a non-scheme allocation of INR 5,500.92 crore (Indian Rupees five thousand five hundred point nine two crore) to AIIMS is a shot in the arm for developing the AIIMS’ institutional capacity, research capabilities and advanced research infrastructure. In a similar vein, the postgraduate Institute of Medical Education and Research, Chandigarh has been allocated INR 2,504.65 (Indian Rupees two thousand five hundred and four point six five crore).
Crucially, the Indian Council for Medical Research has received a substantial bump in allocation, by 26.98% to INR 4,000 crore (Indian Rupees four thousand crore), which is expected to heavily support enhanced medical research.
Customs duty exemptions for life saving drugs
One of the most laudable and public spirited announcements in the Budget is the move to exempt 17 (seventeen) life saving drugs relating to cancer treatment, which also includes duty exemptions on personal imports of drugs, medicines and food for special medical purposes for 7 (seven) rare diseases, proving more accessible and affordable treatment to patients and their families.
Conclusion
Infrastructure development and accessible healthcare continue to be strong underpinnings in the Budget, alongside the maximisation of the efficacy of various government health schemes. The launch of ‘Biopharma SHAKTI’ is symbolic of the Government’s forward-looking approach towards positioning India as a leader in global pharmaceutical manufacturing and presents an exciting opportunity for private health players and investors, with numerous avenues for strategic partnerships and investment in research and development, localised manufacturing and supply chain advancements.
This Prism has been prepared by:
Sidharrth Shankar |
Achint Johri |
For more details, please contact [email protected].
