Budget FY 2026-27: Medical tourism & biopharma push to strengthen healthcare ecosystem: ICRA

New Delhi: The Union Budget for FY2027 is set to support sustained growth across India’s healthcare and pharmaceutical sectors, according to ICRA. With a 10% increase in health spending, a focused push for medical tourism and initiatives to build a domestic biopharma ecosystem, the Budget is poised to create a powerful tailwind for the industry, enhancing patient access, research capacity and long-term sectoral growth.

“The FY2027 Budget signals a well-rounded approach to healthcare, combining higher public health spending, capacity building and targeted fiscal incentives. The focus on medical tourism, domestic biopharma and easing access to critical therapies will support long-term growth across India’s healthcare and pharmaceutical sectors, “said Kinjal Shah, Senior Vice President & Co-Group Head, Corporate Ratings, ICRA Limited.

She further added, “The Union Budget for FY2027 proposes the establishment of five regional medical tourism hubs, which will boost medical tourism volumes.”

The Budget has increased allocation for healthcare by 10.0% to ₹1.1 trillion (BE), reflecting a stronger emphasis on prevention, early diagnosis, screening and diagnostic services to address India’s rising non-communicable disease burden. These hubs are expected to integrate AYUSH services, promoting India as a holistic healthcare destination and enhancing inbound medical tourism.

Shah further noted, “The Rs. 10,000 crore Biopharma Shakti programme, along with three new and seven upgraded National Institutes of Pharmaceutical Education and Research (NIPERs) and a network of around 1,000 clinical trial sites will strengthen India’s domestic ecosystem for biologics and biosimilars, enhancing research capacity and fostering innovation across the pharmaceutical value chain.”

To address workforce gaps, the Budget proposes upgradation of existing health institutions and the creation of additional institutes, aimed at improving availability of trained healthcare professionals across public and private sectors, particularly in underserved regions. On the affordability front, the exemption of 5–10% customs duty on select cancer drugs and full exemption on medicines for rare diseases is expected to lower treatment costs, improve patient access and increase hospital utilisation, particularly in tertiary and quaternary care centres.

ICRA noted that the combined focus on medical infrastructure, research, skill development and fiscal incentives is likely to benefit healthcare delivery, encourage domestic pharmaceutical manufacturing and allied sectors such as medical tourism, creating a positive impact on long-term sectoral growth.