By Kiran Mazumdar-Shaw, Chairperson, Biocon Group
The Union Budget for FY25-26 is reassuring, as it instils confidence that India is investing in the right areas to drive stable and inclusive economic growth.
The eighth consecutive Budget presented by Finance Minister Nirmala Sitharaman is directionally very positive as it addresses key sectors such as healthcare, research & innovation, skilling & employment, MSMEs, startups and exports. This can lay a strong foundation for sustained economic expansion and development.
Healthcare
I welcome the provisions in the Budget to improve access to critical treatments by exempting over 35 lifesaving drugs from basic customs duty, applying concessional duty on six more, and expanding duty exemptions for patient assistance programs.
However, I am a bit disappointed that the exemption is restricted to imported drugs and innovator drugs. If you allow GST exemption on all drugs for cancer and chronic diseases, which are very costly, then I think it will make a huge impact. Unless you do that, you will not really be serving the maximum number of patients, which is the ultimate objective.
We also need to examine the fine print to determine if the government has made substantial allocations to raise overall healthcare spending to 2.5% of GDP, as targeted by the National Health Policy 2017 for 2025. The decline in healthcare’s share of the total budget from 2.3% in FY2019-20 to 1.9% in FY2024-25 has raised concerns about critical gaps in healthcare accessibility, quality, and affordability.
Having said that, I welcome some of the other measures that the Budget announced such as setting up day care cancer centers in all district hospitals and ensuring broadband connectivity in primary healthcare sectors across the country, especially in rural India.
Raising the foreign investment limit in the insurance sector to 100% is positive for the healthcare industry, which relies heavily on strong insurance linkages to improve accessibility and affordability of advanced treatments. For instance, therapies like cell and gene therapy are prohibitively expensive, but with robust insurance mechanisms in place, they could become more accessible to patients. Moreover, integrating comprehensive insurance frameworks could also bolster India’s position as a hub for medical tourism, an area highlighted by the Finance Minister.
Research & Innovation
The allocation of Rs 20,000 crore to implement private sector-driven research, development and innovation is a good step towards promoting value-based, IP-led growth in pharma. The introduction of 10,000 research fellowships under the Prime Minister’s Research Fellowship Program (PMRF) at IITs and IISc and setting up of Atal Tinkering Labs in 50,000 government schools can accelerate India’s transition to a knowledge-driven economy. The proposal to explore a dedicated Fund of Funds for DeepTech startups and companies, as well as establishing a Rs 500-crore Centre of Excellence for AI in Education will contribute to strengthening India’s capabilities in emerging technologies.
I also commend the thinking on nuclear energy and the investment in innovating mini nuclear plants for energy production.
Ease of Doing Business
The Finance Minister’s decision to establish a regulatory reforms committee could lead to enhancing ease of doing business and attracting investments. However, for these reforms to be truly effective, it is essential to include industry representatives who have firsthand experience navigating regulatory frameworks. Those who are directly impacted by regulations bring valuable insights that can help shape a more business-friendly environment, ensuring that reforms genuinely address investment and operational challenges.
Startups
The Budget has addressed India’s startup ecosystem with several key initiatives aimed at improving access to capital and credit. A new Fund of Funds (FoF) with an expanded scope and an additional Rs 10,000 crore contribution will further bolster startup funding, building on the existing government contribution of Rs 10,000 crore.
The doubling of the credit guarantee scheme for startups to Rs 20 crore will provide much-needed financial support to emerging ventures. Similarly, the enhancement of the credit guarantee cover for micro and small enterprises to Rs 10 crore and the provision of short-term loans will further ease liquidity constraints, thus providing more financial support to MSMEs and facilitating their growth.
Spurring Domestic Consumption
The significant personal income tax relief, with no tax payable up to Rs 12 lakh, is a welcome move, as it puts more money in the hands of the middle class. This is expected to provide a significant boost to domestic consumption, driving demand and stimulating economic growth.
Conclusion
In the final analysis, it’s a stable budget that addresses all the important growth drivers in terms of investment priorities.
However, given the evolving geopolitical and geo-economic landscape and the intensifying competition for investments, it remains to be seen whether the Budget has done enough to strengthen our competitiveness, incentivize investments in high-tech sectors, and align with global policies to position India as a preferred destination for capital and innovation.
(A version of this article appeared in The Economic Times on Feb 2, 2025)