Harshit Jain, MD – Founder & Global CEO of Doceree, analyzes the Union Budget 2025 and its key announcements for the healthcare sector
As the Indian healthcare sector is reputed to be one of the largest markets, projected to reach $638 billion by 2025, the Government of India has identified the sector as a crucial growth opportunity in the Union Budget 2025 announcement. With a substantial allocation of Rs 99,859 crore to the healthcare sector, marking a 9.8 per cent increase from the previous fiscal year, significant funds have been earmarked to further strengthen healthcare operations. Additionally, the Production Linked Incentive (PLI) scheme for the pharm industry has been allocated Rs 2,445 crore, reflecting the government’s focus on bolstering domestic manufacturing and innovation in the sector. This funding will not only accelerate the expansion of healthcare infrastructure and rural healthcare connectivity but also foster greater healthcare equity. Further, initiatives such as the introduction of on-arrival visas to promote medical tourism and schemes offering term loans of up to Rs 2 crore to 5 lakh marginalised first-time women entrepreneurs highlight the government’s commitment to broadening opportunities.
Building on last year’s focus on integrating new technologies, which nudged over 77 per cent of healthcare startups to invest in machine learning (ML) and artificial intelligence (AI), the Union Budget 2025 announces the establishment of India’s Centre of Excellence for AI. The expansion of the Atal Tinkering Labs (ATL) initiative, aiming to establish 50,000 ATLs in government schools over the next five years, will further propel research within the Indian healthcare sector.
As private healthcare platforms have improved accessibility by offering remote healthcare services at affordable prices, and government initiatives like the Ayushman Bharat Digital Mission prioritising digital health records, this year’s budget focuses on providing broadband connectivity to at least 90 per cent of anchor institutions including schools, primary health care centres in rural areas, Anganwadi centres, and panchayat offices by 2030, reinforces India’s drive towards giving much-needed attention to discussions surrounding healthcare equity in the world.
With the Government of India taking significant steps to position the country as a global leader in healthcare innovation, it is essential to recognise the potential impact of these budgetary measures on propelling the Indian healthcare industry forward in 2025.
How the Union Budget 2025-26 looks promising for the healthcare industry
1: Reforming medical education framework
The Union Budget 2025-26 allocates significant resources to medical education, adding 10,000 new seats in medical colleges across India. This will be further expanded with an additional 75,000 seats over the next five years, providing more opportunities for aspiring healthcare professionals. By enhancing the reach of medical education and improving quality, India is setting the stage for a more skilled workforce capable of addressing the rising healthcare demands. The planned expansion of the Atal Tinkering Labs (ATL) initiative, targeting the establishment of 50,000 ATLs in government schools over the next five years, is set to drive further research in India’s healthcare sector. With a strong focus on inclusivity, over 60 per cent of these labs are in government schools, and 96 per cent are in co-educational or girls’ institutions, ensuring broad access to STEM-driven innovation. Well-appointed with advanced tools like 3D printers, robotics kits, and Internet of Things (IoT) devices, these labs empower students to experiment and devise innovative solutions for real-world challenges.
2: Driving healthcare innovation & entrepreneurship
The government has increased investment limits for MSMEs, aiming to enhance their capacity and competitiveness. Additionally, introduction of a new credit card scheme tailored for micro-enterprises offers a credit limit of Rs 5 lakh to businesses registered on the Udyam portal. The government plans to issue 10 million of these customised credit cards in the first year, providing greater financial flexibility to small-scale entrepreneurs. These measures underscore the government’s commitment to strengthening the MSME sector, which currently comprises over one crore registered enterprises, employs approximately 7.5 crore individuals, and contributes around 36 per cent to the country’s manufacturing output and nearly 45 per cent to exports. Furthermore, the establishment of Centres of Excellence for AI with investment worth Rs 500 crore will provide a platform for tech-driven healthcare solutions. Additionally, a new scheme offering term loans of up to Rs 2 crore to 5 lakh marginalised first-time women entrepreneurs highlights the government’s commitment to broadening opportunities for women in the healthcare and entrepreneurial sectors. By empowering entrepreneurs with these resources, the government reflects its commitment towards a culture of innovation to improve patient care and operational efficiency, respecting sustainable business outcomes in priority too.
3: Expanding health equity
With a focus on healthcare accessibility, the Union Budget 2025 allocates funds to broadband connectivity in rural health centres, helping bridge the healthcare divide between urban and rural areas. The introduction of registering and providing healthcare identity cards for 10 million gig workers on the e-Shram portal under PM Jan Arogya Yojana ensures that underserved populations, often excluded from formal health coverage, have access to medical care. These initiatives reflect the government’s strong commitment to promoting health equity, ensuring that all Indians, regardless of their economic status or geographic location, receive the right healthcare services precisely when they require.
4: Making healthcare affordable
The government’s commitment to making healthcare more affordable and accessible is further strengthened through continued support for initiatives like the Ayushman Bharat Digital Mission, which improves healthcare access via digital health records. The Union Budget 2025 takes this step a further by announcing a full exemption of customs duty on 36 life-saving drugs used to treat cancer, rare diseases, and other severe chronic conditions. This also includes concessional duties on the bulk drugs needed for their production. These measures will significantly reduce the cost of these essential medications, making them more accessible to patients, especially those from economically disadvantaged backgrounds. This exemption extends to specific drugs under Patient Assistance Programs run by pharmaceutical companies, along with adding 37 new medicines and 13 new patient assistance programs by next year. Further, government’s plan to establish daycare cancer centres in all district hospitals over the next three years is a critical development in enhancing accessibility to cancer treatment across the nation.
5: Positioning India as a global medical tourism destination
With the launch of the initiative ‘Heal in India’, the Union Budget 2025 positions India as a top medical tourism destination with the introduction of on-arrival visas for international patients. This initiative is expected to boost the medical tourism sector, attracting patients from around the world seeking quality and affordable medical care. This initiative will further be strengthened in collaboration with the private sector, capacity building, and streamlined visa norms. The government’s continued support for this sector, combined with exemptions on cancer drug imports, strengthens India’s competitive edge in the international healthcare market.
Driving healthcare innovation: Opportunities & learnings from Union Budget 2025
The Union Budget 2025 has laid a strong foundation for the healthcare sector, yet there are areas that require further investment to ensure comprehensive and sustainable growth in both business and patient outcomes. The government’s emphasis on fostering healthcare entrepreneurship and expanding educational opportunities is commendable, but to maximize the impact of these initiatives, increased funding in healthcare infrastructure, particularly in rural and remote areas, is vital. Strengthening medical education and training programs, including the addition of 10,000 new medical seats and the creation of AI-focused Centres of Excellence, will help address the shortage of skilled professionals and meet the growing demand for quality healthcare. Additionally, prioritizing public health programs, especially those focused on preventive care, mental health, and expanding rural healthcare access, will lead to long-term improvements in overall health outcomes.
With a significant push for AI and digital transformation in healthcare, increased investment in healthcare data solutions and AI-powered innovations will improve patient care, optimize resource allocation, and enhance decision-making processes. The government’s initiatives, such as expanding broadband connectivity in rural health centres and introducing healthcare identity cards for gig workers, further underline the commitment to improving healthcare accessibility and equity. By strategically directing resources toward these critical areas, the government can build upon the budget’s progress, ensuring that India’s healthcare sector remains resilient, innovative, and globally competitive.