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Budget 2025: Nathealth’s recommendations call for a significant increase in healthcare budget allocation to over 2.5% of GDP
Budget 2025 Expectations: Check key demands and the high expectations placed on the upcoming budget to transform India’s healthcare landscape.
Budget 2025 Expectations: As India prepares for the Budget 2025, the healthcare sector is a focal point of debate and expectation. Experts across the country are voicing their demands, hoping that the upcoming fiscal plan will address pressing issues like funding, infrastructure, and accessibility. With the country’s health challenges in the spotlight, all eyes are now on Finance Minister Nirmala Sitharaman, as stakeholders pin their hopes on her leadership to deliver the much-needed reforms. This story takes a closer look at the key demands and the high expectations placed on the upcoming budget to transform India’s healthcare landscape.
Healthcare Budget Expectations 2025
Nathealth- Healthcare Federation of India
Nathealth’s recommendations call for a significant increase in healthcare budget allocation to over 2.5% of GDP, with a focus on the following key areas:
- Reducing Cancer Care Costs: Remove customs duties and reduce GST to 5% on oncology radiation equipment, such as LINACs, to expand cancer treatment capacity in underserved regions
- Redirecting Public Health Revenues: Allocate proceeds from healthcare CESS and the proposed 35% GST slab on tobacco and sugar products to strengthen public health programmes. Advocate for a unified 5% GST on all healthcare goods and services to reduce input costs
- Encouraging Vertical Expansion of Hospitals: Permit hospital heights up to 60 metres nationwide (from the current limit of 45 metres), supported by funding for fire safety upgrades to ensure compliance in high-rise healthcare facilities
- Strengthening Health Infrastructure: Add 2.5–3.0 million hospital beds nationwide through Viability Gap Funding (VGF) and long-term, low-interest capital investments, fostering participation from mid-sized and smaller healthcare providers
- Viable Insurance Reimbursement Rates: Index reimbursement rates under schemes such as CGHS, PMJAY, and ECHS to the Consumer Price Index (CPI) to ensure financial viability, given that many rates have remained unchanged for nearly a decade
- Expanding Medical Education: Increase MBBS and postgraduate medical seats through government-led investment, supported by alternative financing mechanisms such as loans and interest subventions. Increase tuition fees for private DNB programmes by 75%-100% to fund capacity expansion
- Advancing Digital Health: Launch a 10-year digital health incentive plan to enable the adoption of Ayushman Bharat Digital Mission (ABDM) infrastructure, enhance data security, implement electronic health record (EHR) systems, and upskill technical resources. Foster collaboration between industry, academia, and start-ups to drive digital innovation
- Promoting India as a Healthcare Hub: Establish a dedicated fund to position India as a leader in high-quality healthcare and medical tourism, with targeted investments in critical and holistic health services
- Funding R&D in the Med-tech Sector: Announce a fund to support R&D and reward Med-tech innovation in India (including GCC’s) while transitioning to quality-linked standardised procurements norms towards value-based care
Abhay Soi, President, Nathealth and Chairman & Managing Director, Max Healthcare Institute, said, “India’s healthcare sector is at a defining crossroads, presenting both complex challenges and transformative opportunities. Expanding hospital capacity, viable reimbursement frameworks, reducing treatment costs, and advancing medical education will not only address current challenges but also secure India’s position as a global healthcare leader. These efforts will ensure a healthier and more sustainable future for all.”
Advanced Diagnostic Technologies And Research
Dr. Harsh Mahajan, Chair-FICCI Health Services Committee and Founder & Chief Radiologist, Mahajan Imaging & Labs, underlined that it’s essential to make targeted investments that will reshape the future of healthcare and diagnostics.
“Now is the time to invest in advanced diagnostic technologies and research. A critical area for reform is the high GST on medical equipment, which drives up costs and limits access to essential care. Reducing or exempting GST on medical devices will make cutting-edge technology more affordable for healthcare providers and ensure patients receive timely, quality care,” Mahajan urged.
Moreover, offering tax incentives or rebates for companies investing in innovation will accelerate the development of life-saving technologies, enabling faster integration into the healthcare system, Mahajan added.
Alongside this, “Government-backed grants and public health campaigns can help shift the focus towards preventive care, ultimately lowering the long-term burden on the healthcare system. By strategically addressing these key areas, we can create an efficient, accessible, and sustainable healthcare ecosystem that improves health outcomes and reduces costs for everyone.”
Ameera Shah, Promoter and Executive Chairperson, Metropolis Healthcare, too added that the diagnostics sector plays a pivotal role in the healthcare ecosystem, enabling timely detection and precise treatment planning.
“To enhance the quality and credibility of diagnostic services nationwide, we urge the government to implement a robust policy framework that standardises practices and mandates NABL accreditation for every laboratory operating in India,” Shah urged.
GST On Diagnostic
Shah advocated for the introduction of 0% GST on diagnostic services and refunds for GST paid on inputs. Additionally, increasing incentives for research and development in diagnostic technology will foster innovation and position India as a global leader in healthcare advancements.
Preventive Health Check-Up
Shah urged raising the tax exemption for preventive health check-ups from the current Rs 5,000 to Rs 10,000, extending this benefit to multiple family members, and incorporating reimbursements for outpatient diagnostic services within insurance packages. Simplifying regulatory processes and introducing a single-window clearance system will also improve the sector’s business environment.
Med-Tech Sector
Himanshu Baid, MD, Poly Medicure, said, “The upcoming budget provides a vital opportunity to further strengthen the med-tech sector through critical reforms. The government can consider standardising the GST rate of 12% across all medical devices as it would simplify the tax structure, ensuring consistency and ease of doing business. Enhancing export incentives under RoDTEP to 2-2.5%—from the current range of 0.6-0.9%—will bolster the global competitiveness of Indian-made medical devices, enabling manufacturers to expand their reach in international markets.”
Equally important is the need to implement a policy that curtails the reuse of single-use medical devices, ensuring patient safety, minimising healthcare-associated risks, and maintaining high-quality standards across the industry.
Additionally, “extending the Production Linked Incentive (PLI) scheme by 2-3 years would support local manufacturers in scaling production, reducing import dependence, and achieving long-term growth and sustainability. An increase in the healthcare budget allocation to 2.5-3% of GDP is crucial for strengthening healthcare infrastructure, which will benefit both innovation and access to care across the country,” Baid added.
Pharma Industry Lists Key Demands
Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance stated that the Indian pharmaceutical industry is at a pivotal moment, and poised for growth, targeting USD 120–130 billion by 2030 and USD 450 billion by 2047.
“This will position India among the top 5 innovators and No. 1 in volume. To achieve this, the Union Budget 2025-2026 should prioritise innovation, ease of doing business, and policies that strengthen the Life Sciences Ecosystem,” Jain added.
National Research Fund
“It would be encouraging if the Budget allocates at least 10% of the National Research Fund to life sciences, reinstates 200% weighted deductions for R&D expenditure, and expands the patent box regime to include income from patents abroad. Additionally, removing Section 194R related to marketing samples would ease business operations. Further, incentives for AI research in the pharmaceutical sector should be introduced, building on AI Centers of Excellence and medical device training from Budget 2023,” Jain added.
These measures in the Union Budget would enhance India’s competitiveness in life sciences and solidify its global leadership in healthcare innovation. By creating a business-friendly, innovation-driven ecosystem, India can achieve its goals, ensuring health, and prosperity for all, and fulfilling the Viksit Bharat vision.
