India’s health care sector stands at a pivotal stage, with the Union Budget 2025-26 offering a transformative opportunity to address critical challenges and realise its full potential. As we progress swiftly towards becoming a $ 5 trillion economy, quality healthcare becomes a prerequisite for the population. Whilst the private sector continues to do its best to meet growing demand for quality health care, with over 110% of profit of private sector being deployed towards capex in past five years, certain support from the government will go a long way in meeting gaps.

Strategic reforms and substantial investments are essential to bridging gaps, enhancing access to quality care, and tackling the dual burden of communicable and lifestyle diseases.
One of the key priorities for the Union Budget should be raising health care expenditure to over 2.5% of Gross Domestic Product (GDP). This increase would enable significant expansion in physical and digital infrastructure, ensuring improved access to curative and preventive healthcare services. A nationwide effort to add 2.5–3.0 million hospital beds through Viability Gap Funding (VGF) and long-term, low-interest capital investments is critical. These investments could be targeted toward mid-sized and smaller health care providers, fostering a more equitable distribution of health care facilities.
Additionally, allowing hospitals to expand vertically could alleviate the strain on urban infrastructure. Complementary funding for fire safety upgrades would ensure compliance and safety in high-rise health care facilities.
Cancer continues to be a leading cause of death in India, with treatment expenses often out of reach for many. To make care more accessible, policy measures such as reducing import tariffs and lowering Goods and Services Tax (GST) on oncology equipment, including Linear Accelerators (LINACs), to 5% could play a transformative role. Expanding treatment facilities in less-served regions is equally vital, ensuring patients nationwide have access to timely and advanced care. At present, the high import duties on medical devices, which can reach up to 36%, significantly inflate costs, particularly for smaller health care providers who struggle to remain competitive. Easing these duties could empower mid-sized service providers to offer more affordable treatment options, especially in smaller cities. Increased competition in these regions would further drive down costs, creating a more equitable system and extending essential cancer care to those in need.
The cost of health care services in India is often impacted by fragmented tax structures. Simplifying the GST regime by introducing a unified 5% GST slab on all healthcare goods and services could help reduce input costs for providers. Revenue generated from healthcare-specific CESS and a proposed higher GST rate on some products could be redirected to bolster public health programmes.
Insurance reimbursement rates under public schemes like PMJAY, CGHS, and ECHS have not been revised for nearly a decade, making it challenging for healthcare providers to remain financially viable. Indexing these rates to the Consumer Price Index (CPI) would ensure that providers can sustain operations while continuing to deliver high-quality care.
The medical technology (med-tech) sector plays a pivotal role in advancing health care outcomes. Announcing dedicated funding to support research and development (R&D) in this sector would incentivise innovation and enable India to transition to quality-linked procurement norms. Such initiatives could drive value-based care and position India as a leader in med-tech innovation.
Technology has the potential to revolutionise health care delivery in India. A comprehensive 10-year digital health incentive plan could drive the adoption of Ayushman Bharat Digital Mission (ABDM) infrastructure.
This would include the implementation of electronic health records (EHR), enhanced data security measures, and technical upskilling for health care professionals. Collaborations between industry, academia, and start-ups could further accelerate innovation and make India a leader in digital health solutions.
India has significant potential to become a premier destination for medical tourism. A dedicated fund to promote India as a provider of high-quality health care services, along with investments in critical and holistic health infrastructure, would attract international patients. This move could also contribute to economic growth while showcasing India’s strengths in specialised and affordable health care.
Addressing critical areas such as infrastructure, affordability, innovation, and workforce development can pave the way for a resilient healthcare system. The Union Budget 2025-26 presents an opportunity to implement strategic reforms that ensure equitable access to quality care and prepare India to tackle health care challenges effectively. The 2025-26 Union Budget is a momentous opportunity to transform India’s health care system and secure a healthier future for all. Reforms ranging from increased health care spending and affordable cancer care to digital health adoption and med-tech innovation can drive significant progress. With bold decisions and a clear vision, India can emerge as a global leader in health care, ensuring its citizens receive the care they deserve while setting an example for the world.
This article is authored by Abhay Soi, president, NATHEALTH and chairman & managing director, Max Healthcare Institute Limited.