Pharma Industry Seeks R&D Sops, Simplification of Regulatory Framework in Budget

The government should look at offering globally competitive R&D incentives and fiscal support for clinical research to the domestic pharma industry in the upcoming Budget in order to help it transform into an innovation-led $130-billion sector by 2030, according to industry bodies.

The policymakers should also consider GST structure rationalisation, restoration of weighted R&D deduction and simplification of compliance and regulatory framework in the upcoming Union Budget for the financial year 2026-27.

"The industry seeks globally competitive R&D incentives that align with India's innovation ambitions, enhance the scientific ecosystem, and support the transition from a volume-driven model to an innovation-led pharmaceutical sector," Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain said in a statement.

With a strong track record of resilience and innovation over six decades, the industry is poised to achieve its ambitious target of reaching $120–130 billion by 2030, and ultimately $450 billion by 2047, he noted.

Recent global challenges, including supply chain disruptions, and geopolitical uncertainty, underscore the need for strategic support to maintain and strengthen India's competitive edge, he added.

Stressing the need for the restoration of Weighted R&D Deduction (up to 200%), he noted that it would significantly boost investment in novel drugs, complex generics, biosimilars, and vaccines.

Address the widening inverted duty structure, ensuring smooth GST refunds on both goods and services, to maintain manufacturing viability and affordability, Jain said.

Incentivise Make in India, backward integration, and foreign direct investment (FDI) in pharma manufacturing, he added.

Besides, there is a need to enhance government healthcare spending towards the National Health Policy 2017 target of 2.5% of GDP by 2026–27 to strengthen the overall healthcare ecosystem, Jain said.

IPA represents 23 leading Indian pharmaceutical firms, including Sun Pharma, Dr Reddy's Laboratories and Zydus Lifesciences.

The Organisation of Pharmaceutical Producers of India (OPPI), which represents research-based global pharmaceutical companies in India, stated that there is an opportunity in the upcoming Budget to further strengthen the country's healthcare and life sciences ecosystem with a clear patient-first focus.

"From a fiscal standpoint, rationalisation of GST on medicines and medical products, clarity on input tax credits, greater targeted customs duty relief for critical raw materials and advanced manufacturing inputs would help ease cost pressures and improve affordability," OPPI Director General Anil Matai said.

Reintroducing or strengthening R&D-linked tax incentives and support for fiscal support clinical research can further encourage innovation-led growth and global competitiveness, he added.

"We also look forward to measures that improve regulatory predictability, encourage clinical research, and support advanced manufacturing, while ensuring that quality and safety remain paramount," Matai said.

As the industry continues with the ethical business practices in alignment with the UCPMP, a trust-based and collaborative approach between government, industry, and healthcare stakeholders will be key to long-term progress, he added.

Deloitte India Partner Joydeep Ghosh said multiple regulators regulate several licenses and compliances for both the pharmaceutical and medical device sectors in India.

"In light of the above, the government should consider forming a single regulatory authority for both pharmaceuticals and medical devices, with experts from across the sectors on board," he stated.

This would promote ease of doing business through a streamlined regulatory framework and boost investments in the sector, he added.