India’s Pharma Budget Revolution: Rs. 1,100 Crore Boost and a Strategic Shift in DoP Funding

In a bold move signaling India’s intent to transform its pharmaceutical landscape, the Union Budget 2026-27 has significantly raised the funding for the Department of Pharmaceuticals (DoP) — reflecting both a quantitative increase and a qualitative pivot in priorities. With a 12.6% overall hike in allocation and a dedicated Rs. 1,100 crore earmarked for new schemes, this year’s budget marks a concerted effort to turn India into a global hub for pharmaceutical manufacturing and innovation.

A Strategic Surge in Funding

The DoP’s total allocation for the fiscal year 2026-27 stands at Rs. 5,931.22 crore, up from Rs. 5,268.72 crore in the previous year’s budget estimates. Compared to the revised estimates of FY 2025-26, which were significantly lower at around Rs. 4,369.70 crore, this represents a meaningful restoration and uplift of funding, underscoring renewed policy momentum.

But numbers alone don’t tell the full story — it’s how this money is being directed that shows government intent.

Rs. 1,100 Crore For New Strategic Schemes

At the heart of the DoP’s enhanced budget is the Rs. 1,100 crore allocation for two newly introduced flagship schemes:

• Biopharma Shakti – Allocated Rs. 500 crore, this initiative is designed to foster India’s emergence as a global biopharmaceutical manufacturing powerhouse. By building ecosystems around biologics and biosimilars, the scheme aims to reduce dependence on imports while positioning India as a leader in next-generation medicines.
• Chemical Parks Scheme – With Rs. 600 crore set aside, this plan supports the development of plug-and-play chemical parks across states. These parks are intended to attract investments, enable clustered production, and bolster domestic chemical output to reduce import reliance.

Together, these schemes signal a shift from just sustaining industry to actively shaping future-ready pharmaceutical ecosystems.

PLI Schemes Get a Boost Too

Although the overall increase in DoP funding is impressive, a closer look reveals that Production Linked Incentive (PLI) schemes — crucial for stimulating domestic manufacturing — also received a moderate uplift.

For FY 2026-27, PLI schemes across bulk drugs, medical devices, and pharmaceuticals have been allocated Rs. 2,499.84 crore, slightly above last year’s budget estimates. Notably, allocations for bulk drugs and medical devices have grown, though some categories like pharmaceuticals saw a modest adjustment.

PLI schemes have proven effective for scaling domestic production and cutting imports — a priority echoed across the broader budget discussion. Independent reports show that previous PLI efforts have already helped boost domestic API output, reducing import bills and stabilising supply chains.

Reimagining Research and Innovation

One of the most compelling aspects of the budget lies in its emphasis on research and innovation. The Promotion of Research and Innovation in Pharma and MedTech (PRIP) scheme sees a striking rise in funding — from Rs. 245 crore to Rs. 750 crore.

This surge isn’t merely fiscal catch-up; it reflects the government’s ambition to empower R&D in advanced fields like biotech and medical technology — sectors that will drive future growth and global competitiveness.

Shifts in Traditional Pharma Programs

While new and strategic programs gained momentum, some well-established schemes experienced funding adjustments:

• Jan Aushadhi, which provides affordable generic medicines, saw its allocation trimmed compared to the last budget.
• Schemes under Strengthening of Medical Devices Industry (SMDI) also faced reductions, as did several sub-programs within the broader pharmaceutical development portfolio.

Although these changes have raised some concerns among stakeholders, budget documents suggest the goal isn’t cutting costs but realigning priorities toward future-oriented growth.

A Budget for Future-Proofing India’s Pharma Sector

Overall, the increased allocation — especially the Rs. 1,100 crore for new initiatives — reflects a strategic recalibration: from incremental funding to investment in innovation, scale, and self-reliance. With targeted support for biopharma, chemicals, R&D, and manufacturing incentives, India is taking bold steps toward a more resilient and globally competitive pharmaceutical industry.