Union Budget 2026-27: Over ₹1 trillion earmarked for the nation's health

Biopharma Shakti initiative to tackle burden of non-communicable diseases, turn India into global, innovation-led hub

The Union Budget 2026-27 signals a calibrated but strategic shift in India’s healthcare priorities, with a clear focus on tackling the rising burden of non-communicable diseases (NCDs) while building a long-term ecosystem for research, innovation, and skilled manpower. For the first time, the healthcare Budget crossed the Rs 1 trillion mark. However, as a percentage of gross domestic product (GDP), public healthcare spending continues to lag global benchmarks.

 

Healthcare allocation was increased by 6.57 per cent over last year’s Budget estimates, to Rs 1.06 trillion, and by nearly 10 per cent over revised estimates. At the centre of the Budget’s healthcare strategy was a renewed push towards biopharmaceutical manufacturing, particularly biologics and biosimilars, as India confronts a sharp rise in NCDs such as diabetes, cancer, and autoimmune disorders. 

 

To support this, Mission Biopharma Shakti, a Rs 10,000-crore programme spread over five years (Rs 500 crore for FY27), was announced. Aimed at creating an end-to-end biopharma ecosystem encompassing research, talent development, clinical trials and manufacturing, the initiative seeks to take India from being a volume-driven supplier to an innovation-led biopharma hub. 

 

Three new National Institutes of Pharmaceutical Education and Research (NIPERs) would also be set up, while seven existing ones would be upgraded to strengthen advanced research, industry collaboration and high-end skilling.

 

Reflecting the focus on research, funding for the Indian Council of Medical Research rose sharply by 28 per cent, to Rs 4,000 crore, even as major health schemes saw only marginal increases. Allocations for Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana and the National AIDS and STD Control Programme rose by less than 1 per cent each. Meanwhile, the newly announced Allied Health Professionals (AHP) skilling scheme received Rs 1,000 crore for FY27. 

 

While the allocation to the Department of Pharmaceuticals (DoP) was increased 12.56 per cent, to Rs 5,931.22 crore, funding for the Promotion of Research and Innovation in Pharma and MedTech jumped more than three-times – from Rs 245 crore to Rs 750 crore. For the production-linked incentive schemes, it rose modestly. Including allocations for the DoP and the Ayush Ministry, total healthcare-related allocation for FY27 crossed Rs 1.16 trillion.

 

Vishal Bali, executive chairman, Asia Healthcare Holdings, a healthcare investment platform, said the increase did not represent a structural inflection point yet. “Overall, the allocation does not mark an exponential shift, given the demand-supply gap and the rising import bill for medical technology,” he said. Industry experts also pointed out that while high-income countries allocate 10-12 per cent of their GDP to healthcare, India’s allocation remains less than 2 per cent.

 

There was, meanwhile, optimism on the biopharma front. Anand Kumar, managing director of vaccine-maker Indian Immunologicals, said India already supplies nearly 60 per cent of the world’s vaccines, and this initiative has the potential to accelerate its transition from being a volume-driven supplier to an innovation-led biopharma leader.

 

Shreehas Tambe, CEO and MD, Biocon Biologics, said the mission was “well-timed”, especially when viewed alongside the Rs 1 trillion R&D and innovation commitment announced in November 2025. 

 

A key enabler for innovation is clinical research. The Budget proposed a nationwide network of 1,000 accredited clinical trial sites, aimed at accelerating drug development timelines and positioning India as a preferred global destination for clinical research. The Budget also sought to strengthen the Central Drugs Standard Control Organisation through a scientific review cadre to align approval timelines with global standards.

 

It also emphasised creating human capital by upgrading existing institutions for AHPs and establishing new ones across government and private sectors. This would help add 100,000-odd professionals over five years across 10 disciplines, including radiology, anesthesia, OT technology and behavioural health.

 

Mental healthcare also received targeted attention, with Finance Minister Nirmala Sitharaman announcing NIMHANS-2 in north India and the upgradation of mental health institutes in Ranchi and Tezpur as regional apex centres.

 

Continuing its push to lower the cost of critical care drugs, Sitharaman announced a full Customs duty exemption on 17 life-saving cancer drugs and therapies for seven rare diseases. Earlier, these invited a 5-10 per cent duty. These include widely used targeted and immunotherapy drugs such as Ribociclib, Abemaciclib and Tremelimumab (costs Rs 2-4.7 lakh per vial).

 

The exemption was also extended to drugs and special medical foods for rare diseases covered under the National Policy for Rare Diseases, including primary hyperoxaluria, cystinosis, hereditary angioedema and primary immunodeficiency disorders. 

 

Sitharaman also announced measures to position India as a global hub for medical value tourism (MVT) and deepen the Ayush (ayurveda, yoga and naturopathy, Unani, siddha, and homeopathy) ecosystem.

 

A key proposal was the creation of five regional medical hubs, supported by the Centre and developed in partnership with states and the private sector. These integrated hubs would bring together medical services, education and research, and include Ayush centres, MVT facilitation units, advanced diagnostics, besides post-treatment care and rehabilitation infrastructure.

 

The Budget proposed setting up three new All India Institutes of Ayurveda, upgrading Ayush pharmacies and drug testing laboratories to improve certification and skilled manpower, besides enhancing the WHO Global Traditional Medicine Centre at Jamnagar.

 

Rajiv Vasudevan, founder, CEO and MD, Apollo AyurVAID, said to scale up Ayush distribution network, 300-400 stock keeping units (SKUs) of Ayush drugs at Jan Aushadhi stores could be considered, besides Ayush pharmacies. 

 

Taken together, the Budget underscored a gradual but deliberate shift from incremental spending towards ecosystem-building. The test will lie in execution speed and the ability to crowd in private investment to convert policy intent into measurable health and economic outcomes.