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Budget 2026 Boosts Biopharma with Rs 10,000 Cr SHAKTI Plan, Skips R&D Tax Breaks

The Union Budget 2026 has signaled sustained policy support for India's pharmaceutical and life sciences sector, with a strong emphasis on biopharma innovation and infrastructure. A key announcement is the Rs 10,000 crore Biopharma SHAKTI outlay aimed at strengthening India's position as a global hub. While customs duty relief for critical treatments supports patient affordability, the industry's demand for enhanced R&D tax deductions remains unaddressed. EY maintains an optimistic medium-term outlook, viewing the budget as a foundation for long-term capacity building, with execution being key.

Key Points: Budget 2026: Biopharma SHAKTI Plan, No New R&D Tax Incentives

  • Rs 10,000 crore Biopharma SHAKTI outlay
  • Expansion of NIPERs & clinical trial network
  • Customs duty relief for critical treatments
  • No new direct tax incentives for R&D
  • Focus on long-term capacity building
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Budget reinforces long-term biopharma growth despite no new tax incentives: EY

EY analysis: Budget 2026 reinforces biopharma growth with a Rs 10,000 crore SHAKTI outlay but offers no new direct tax incentives for R&D.

"the policy measures announced provide a positive foundation for advancing India's position in biopharma - EY Report"

New Delhi, February 2

The Union Budget 2026 has signalled a sustained policy push for India's pharmaceutical and life sciences sector, with a strong emphasis on biopharma innovation, research infrastructure and affordability, even as direct tax incentives remain unchanged, noted EY's Budget sectoral alert.

According to EY's Budget 2026 pharma alert, this year's Budget offers a steady direction for the pharma and life sciences sector, with a clear emphasis on building biopharma capabilities, underlining the government's intent to strengthen India's position as a global biopharma hub

A key highlight is the announcement of the Rs 10,000 crore Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation) outlay, alongside the expansion of the National Institutes of Pharmaceutical Education and Research (NIPERs) and the creation of a large clinical trial network and strengthening the Central Drugs Standard Control Organisation (CDSCO). EY noted that these measures reflect the government's intent to strengthen innovation, enhance research infrastructure and gradually reduce import dependence.

The report also pointed to customs duty relief as a positive for patient access, stating that "the continuation of Customs Duty relief for cancer and rare-disease treatment supports patient affordability and aligns with the broader objective of improving access to specialized treatments"

At the same time, the industry's long-standing demand for enhanced tax support for innovation remains unaddressed. EY flagged that "a key omission is the absence of any direct tax incentives for R&D in the form of an enhanced deduction," an issue the sector has repeatedly raised with policymakers

Despite this, EY maintained an optimistic medium-term outlook, noting that "the policy measures announced provide a positive foundation for advancing India's position in biopharma and healthcare services," supported by parallel initiatives in AYUSH, medical tourism, allied health skilling and mental healthcare infrastructure

Overall, the Budget is seen as reinforcing long-term capacity building and innovation in the pharma sector, with execution and future tax reforms expected to determine the pace of growth.

- ANI

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Reader Comments

R
Rahul R
Good to see the customs duty relief continuing for cancer treatments. Affordability is a major concern for middle-class families. However, the lack of new tax incentives for R&D is a missed opportunity. Innovation needs financial fuel, not just policy statements.
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Aman W
Strengthening CDSCO is the most important part for me. We need a world-class, efficient regulator to ensure drug safety and speed up approvals. Hope the budget allocation translates into faster clearances and better monitoring on the ground.
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Sarah B
The inclusion of AYUSH and mental healthcare in the broader vision is smart. Holistic healthcare is the future. Building capacity in biopharma while also supporting traditional medicine can make India a unique global health destination.
K
Karthik V
Execution is key. We've seen big announcements before. The Rs 10,000 crore outlay must reach the right research institutes and startups without red tape. Hope the focus on 'affordability' means cheaper medicines for common people soon.
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Nidhi U
As someone whose family has dealt with a rare disease, the duty relief is a lifeline. But it's not enough. We need the government to push for more domestic manufacturing of these high-cost drugs. The biopharma push should prioritize this.

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