Praxis Global Alliance Unveils Key Budget 2025 Expectations Across Major Sectors
Healthcare- Attributed to Garima Malhotra, Associate Partner, Healthcare and Lifesciences at Praxis Global Alliance
The Indian healthcare sector is at an exciting threshold of transformational growth and looks towards Budget 2025 to focus on such strategic initiatives that would work as a catalyst for growth. While last year’s budget saw a significant increase in healthcare spending, the sector is hoping for continued momentum towards the National Health Policy’s ambitious goal of allocating 2.5% of GDP to healthcare. This year, the focus is expected to shift beyond mere allocation increases to strategic investments that can revolutionize healthcare delivery and accessibility across the nation.
• Infrastructure: A key area of concern is the persistent gap in healthcare infrastructure, particularly in rural and underserved areas. The industry expects the budget to prioritize long-term financing solutions for hospital construction and expansion. This includes tax breaks, extended loan repayment periods, and public-private partnerships to incentivize investment in tier 2 and 3 cities. Expanding diagnostic centers in these regions is also crucial for early disease detection and timely intervention.
• Technology: Digital health is another area ripe with potential. The budget is expected to further promote telemedicine and AI-driven diagnostics, enabling remote consultations and faster, more accurate diagnoses. Integrating these technologies into existing hospital workflows can significantly improve efficiency and patient care. Investments in robust digital infrastructure are also needed to ensure equitable access to these advancements across the country.
• Workforce: India faces a critical shortage of healthcare professionals, from doctors and nurses to allied health workers. The industry is looking to the budget to address this through increased funding for medical education and skill development programs. Incentivizing specialization in critical areas and promoting upskilling initiatives for existing healthcare workers can help bridge this gap and ensure quality care delivery.
• Accessibility: Expanding the reach of health insurance is crucial for achieving universal health coverage. The industry hopes to see increased coverage under the Ayushman Bharat scheme and initiatives to make health insurance more accessible to the lower middle class. This will not only provide financial protection but also boost patient volumes for hospitals and diagnostic centers, enabling them to invest in further improvements.
• Preventive care: A shift towards preventive healthcare is essential for long-term health outcomes. The budget is expected to allocate increased funding for nationwide screening programs, wellness initiatives, public health awareness campaigns, and mental health programs. This will not only reduce the burden of chronic diseases but also create opportunities for hospitals and diagnostic centers to engage in early detection and intervention.
• MedTech: The MedTech sector is a crucial enabler of quality healthcare. The industry expects the budget to promote domestic manufacturing by offering tax incentives to attract global manufacturers. To further support affordability, reducing import duties on lifesaving equipment is essential. Further, incentivizing R&D and streamlining regulatory pathways will foster innovation and accessibility of essential medical technologies.
The healthcare industry is optimistic that the upcoming budget will address these critical areas and lay the foundation for a more robust and inclusive healthcare system in India. By prioritizing strategic investments and fostering innovation, the government can pave the way for a healthier and more prosperous nation.
Pharmaceuticals- Attributed to Garima Malhotra, Associate Partner, Healthcare and Lifesciences at Praxis Global Alliance
The Indian pharmaceutical industry anticipates Budget 2025 to introduce transformative measures that drive innovation, manufacturing, and export competitiveness. While previous budgets have laid a strong foundation with initiatives like Production Linked Incentive (PLI) schemes and an increased R&D focus, the industry now looks forward to policies that further align with India’s ambition of becoming a $130B pharma market by 2030. This year’s expectations revolve around incentivizing research, streamlining taxation frameworks, and fostering regulatory ease to bolster the sector’s growth and resilience in an evolving global landscape.
R&D: India currently lags in drug development. To tackle this, the government has outlined a 10-year plan to develop 16 APIs and 2 KSMs sustainably and cost-effectively. To further solidify India’s global leadership in the pharmaceutical sector and to further India’s goal of API self-reliance, the industry expects increased government investment into drug development parks, research institutes and fostering academia-industry ties.
Regulatory: The industry expects for the establishment of a single, centralized regulatory authority ensuring alignment with global standards and fostering ease of doing business. We expect the government to introduce additional tax deductions, such as 1.25x for expenditures on training and skill development initiatives.
Taxation: The pharmaceutical industry urges the government to extend the sunset date for the concessional 15% tax rate, enabling companies to sustain local manufacturing growth under the “Make in India” initiative. Additionally, the sector seeks clear guidelines to classify free drug samples and promotional materials valued below INR 1K as deductible marketing expenses. The industry also calls for definitive clarifications affirming Input Tax Credit (ITC) eligibility for legitimate business expenses, particularly those related to medical practitioners. The current ambiguity often leads to liquidity constraints and prolonged tax disputes, impacting operational efficiency. Furthermore, aligning GST rates for APIs (currently 18%) with those of finished formulations (12% or 5%) is crucial to resolving ITC accumulation, improving cash flow, and streamlining credit refunds for manufacturers.
Infrastructure: Pharmaceutical infrastructure in India is facing significant gaps, limiting the growth of manufacturing and research capabilities. The industry expects the budget to address these challenges by prioritizing long-term financing solutions, including tax incentives, extended loan repayment periods, public-private partnerships, and the establishment of dedicated innovation zones. Additionally, investments in setting up manufacturing hubs, research facilities, and logistics networks in tier 2 and 3 cities are essential to enhance production efficiency and drive the growth of the pharmaceutical industry in India.
Consumer and Internet – Attributed to Shivaraj Jayakumar, Practice Leader, Consumer & Internet at Praxis Global Alliance
1. Reduce GST rates on mass-consumption FMCG products: Price sensitivity among lower-income groups has led to a decline in mass-segment consumption. By reducing GST on personal care and packaged foods from 18 percent to 12 percent the government can offset this decline & support FMCG industry. A projected 8 percent increase in volume sales of mass-market FMCG products leading to higher tax collections from increased consumption and a 0.5 percent boost in GDP.
2. Tax incentives for innovation in FMCG industry: Govt. is expected to introduce a 150 percent weighted tax deduction on R&D expenses for FMCG companies innovating in sustainable packaging and health-focused products.
3. Tax incentives for rural market development and innovation: Rural India accounts for over 35 percent of FMCG consumption and is poised for significant growth if supported by better distribution infrastructure and affordable products.
Govt. is expected setup FMCG rural growth fund with budget allocation of INR10K crore to strengthen rural distribution networks and offer tax rebates for companies investing in affordable rural product lines. A 10 percent growth in rural FMCG sales will contribute an additional INR50K crore in annual revenue for the industry. Enhanced R&D incentives would promote innovation, creating premium and sustainable product categories with higher profit margins.
4. Reduction of custom duty: Rationalisation of custom duty rates by reducing duties for inputs that are used for manufacture of consumer products and increasing duties on direct import of finished products.
5. Financing to small retailers: Govt. is expected to provide low-cost loans to small retailers thereby, fostering growth and stability within the sector.
6. Expanding the PLI Scheme for the consumer goods industry: Expand the scope of the Production Linked Incentive (PLI) scheme to consumer goods industry, such as home appliances, personal care products and small consumer electronics. An expanded PLI scheme will bolster India’s domestic manufacturing capacity, reducing import dependency and addressing demand-supply gaps for consumer goods. This policy is projected to attract substantial investments in the sector, drive industrial output and support the creation of over 1 million jobs within five years. Strengthening backward linkages and fostering innovation will enable MSMEs to scale operations and contribute to the manufacturing.
7. Policy changes to boost retail sector: Extending MSME benefits to retail and wholesale traders, recognizing the F&B retail sector as an essential service, low-interest financing, tax relief, and an accelerated rollout of the national retail policy will help boost retail sector.
8. Regulating in quick commerce industry: Implement regulatory measures to curb predatory pricing and ensure transparency in fund usage by quick commerce platforms. This includes introducing compliance with FDI norms, fair trade practices and supply chain transparency. Regulating quick commerce practices will create a level playing field, safeguarding the livelihoods of over 30 million Kirana stores and 8 crore small retailers and distributors, which are vital to India’s retail ecosystem. The policy will promote sustainable competition, ensuring quick commerce platforms operate ethically and transparently. With improved oversight, consumer trust in e-commerce will strengthen, while protecting traditional retail sectors will contribute to a more equitable economic growth trajectory.
9. Support for digital infrastructure and e-commerce: Government investment in digital infrastructure is vital to boost e-commerce and technology use in retail, with better connectivity, payment systems, and technological advancements aiding businesses in improving efficiency, customer outreach, and market competitiveness. Encouragement for omnichannel retail approaches are expected to enhance the retail sector.
10. Higher income tax exemptions to boost disposable income: Indian economy is facing a slowdown. The Q1 and Q2 GDP data have not been encouraging, and the net GST collections have grown by 3.3 percent YOY. With consumption accounting for over 60 percent of India’s GDP, boosting disposable income is critical to reviving demand. Relaxing the basic income tax exemption limit under the old regime from INR2.5 lakh to INR3.5 lakh could lead to higher disposable income. A 5-7% increase in disposable income for middle-income households could lead to a 6% rise in consumer spending on FMCG & retail.
Mobility Energy and Transportation – Attributed to Kshiteej Mishra, Practice Leader, Mobility, Energy and Transportation at Praxis Global Alliance
• Lower GST and tax incentives for EV batteries and solar components
EV industry advocates for GST parity on batteries, currently taxed at 18%, compared to 5% for EVs. A uniform rate would streamline costs across the value chain and reduce the overall cost of EVs by 5%-10%. Similarly, lowering the GST on solar manufacturing components, currently taxed at 12%-18%, could significantly enhance the affordability of solar energy. This move would encourage greater consumer adoption, boost domestic manufacturing, reduce reliance on imported technologies, and potentially increase solar installations by up to 15%
• Advocating for large-scale investments in renewable energy and BESS
Renewable energy in India relies heavily on wind and solar power, which are abundant but not always consistent, creating an imbalance between supply and demand. Battery Energy Storage Systems (BESS) can solve this by storing excess energy when production is high and releasing it when demand increases, stabilizing the grid. However, BESS is not yet commercially viable. To encourage its use and improve grid reliability, government subsidies and tax rebates for BESS are needed. For example, 10 years ago, subsidies for solar energy helped make it widely adopted
• Production-Linked Incentives (PLI) for new-age energy tech
PLI scheme has helped India’s EV and solar sectors grow, with INR 18,100Cr for battery technology and INR 4,500Cr for solar manufacturing between 2021-23. However, India is still far behind China in renewable energy manufacturing. Expanding the scheme to focus on areas like offshore wind and better energy storage is important. These steps can boost innovation, cut reliance on imports, create jobs, and make India a global leader in renewable energy while supporting sustainable growth
• Consumer awareness and vendor network strengthening for rooftop solar
To scale rooftop solar adoption, enhancing consumer awareness and strengthening vendor networks is essential. With 16.4 GW installed in 2024 and a target of 40 GW by 2030, expanding certified vendor networks will ensure quality installations and boost consumer confidence. Additionally, clarifying the financial structure with low-interest loans or financial assistance can ease the installation costs. Upgrading the National Solar Portal will reduce technical issues and streamline project implementation. These steps under the PM Surya Ghar Yojana will help increase rooftop solar adoption and support India’s renewable energy goals
• Infrastructure status for charging stations
A budget of INR 10,900Cr over the next five years is recommended to boost the adoption of Electric Vehicles (EVs), set up charging infrastructure, and foster the growth of an EV manufacturing ecosystem in India. This funding would support the development of 46,000 charging stations by 2030, focusing on underserved areas. It would also provide financing incentives by granting infrastructure status to charging stations, lowering borrowing costs for investors. Additionally, promoting public-private partnerships would expedite network deployment and enhance service quality. These measures are crucial to achieving 30% EV penetration by 2030, driving clean mobility, and reducing fossil fuel reliance
Technology- Attributed to Aryaman Tandon, Managing Partner, Technology at Praxis Global Alliance
• Generative AI (GenAI)
Generative AI (GenAI) is set to transform industries by boosting automation, creativity, and decision-making. Budget allocations should prioritize R&D, development, and deployment of GenAI technologies. The government can support this by funding AI research, incentivizing startups, and creating a regulatory framework. These measures could potentially add US$ 15.7B to India’s economy by 2035, benefiting sectors like healthcare, finance, and media, through enhanced efficiency and the creation of new business models.
• AI Data Centers
AI applications need substantial computational power, making investment in AI data centers crucial. The government should incentivize the creation of energy-efficient, high-capacity centers by offering tax rebates and grants. With the AI data center market growing at 15% annually, India must expand infrastructure to stay competitive. These investments will support AI model development, improve business efficiency, and position India as a global leader in AI-driven technologies.
• Virtual Reality (VR) / Augmented Reality (AR)
VR, AR, and the Metaverse are reshaping sectors like gaming, education, and healthcare. The government should allocate funds for R&D, affordable hardware, and Metaverse expansion. Grants for VR/AR startups and training programs will scale these technologies. By investing in these innovations, India can create immersive experiences, improve remote learning, and drive digital healthcare, positioning the country as a global leader in emerging tech and boosting productivity across industries.
• Technology’s role in revolutionizing other industries
AI, IoT, and automation are transforming agriculture, healthcare, and manufacturing, driving efficiency and contributing to GDP growth. The government should provide subsidies for adopting these technologies, particularly in smart factories and AI healthcare solutions. Investments in automation will modernize logistics and finance, boosting industrial productivity and enabling India to achieve its US$ 5T economy goal, reducing reliance on manual labor.
• Startup opportunities in Tech
India’s tech sector offers vibrant opportunities for startups in areas like AI, blockchain, fintech, edtech, and healthtech. The government should support innovation hubs, provide venture funding, and offer tax incentives to foster entrepreneurship. By creating incubators and mentorship programs, India can scale startups and help them access global markets, fostering a thriving ecosystem and positioning India as a leading global tech hub.
Food & Agriculture- Attributed to Akshat Gupta, Practice Leader, Food & Agriculture at Praxis Global Alliance
1. Increased budgetary allocation: We expect a higher allocation than the previous INR 1.52 lakh crore to enhance agricultural infrastructure, particularly in cold storage, warehousing, and supply chain management. These investments are critical to reducing post-harvest losses and improving market access for farmers
2. Lower interest rates on agricultural loans: We urge the government to reduce & standardize agricultural loan interest rates to 3-5%, easing financial burdens and improving access to credit. Additional capital support for micro-irrigation systems, solar pumps, and watershed projects is also essential to empower small and marginal farmers
3. Greater support for SHGs and small farmers: For 2023-24, INR 40,475 Cr has been allocated under Rural Infrastructure Development Fund (RIDF XXIX), bringing the cumulative allocation to INR 4,98,411 Cr, including INR 18,500 Cr under Bharat Nirman. We expect increased allocations to NABARD and higher interest subsidies to reduce the cost of credit for self-help groups (SHGs) and smallholder farmers
4. Doubling PM-KISAN support: Doubling the annual installment under PM-KISAN from INR 6,000 to INR 12,000 would provide much-needed financial stability and resilience to farmers
5. Revised GST for agricultural inputs: We anticipate a reduction in GST on pesticides from 18% to 5%, along with GST exemptions on seeds, agricultural machinery, and fertilizers. Additionally, zero-premium crop insurance for small farmers under the Pradhan Mantri Fasal Bima Yojana would offer vital risk coverage
6. Boosting agriculture exports: Agriculture exports in India stood at ~US$ 48B in FY24, reflecting a decrease of ~10% compared with US$ 53B in FY23. We expect the government to introduce targeted initiatives, such as improving quality-testing infrastructure, offering export-linked incentives for food processing, and enhancing global marketing support for Indian agricultural products. These measures would not only make Indian agricultural products more competitive globally but also drive a significant increase in export volumes and value
7. Accelerating digital agriculture: The Union Cabinet approved the ‘Digital Agriculture Mission’ on September 2, 2024, with a financial outlay of INR 2,817 Cr, including INR 1,940 Cr from the central government. We expect a renewed focus on the Digital Agriculture Mission, including robust Agri-databases and frameworks, to modernize farming practices and support private players in developing innovative digital solutions
8. Improved Mandi infrastructure and MSP reforms: Enhancing mandi infrastructure, expanding MSP coverage beyond 23 commodities, disallowing imports below MSP, and setting minimum export prices only during emergencies are necessary steps to safeguard farmer interests
9. Streamlined seed distribution: We expect ICAR and other research institutions to take a lead in distributing improved seed varieties, coupled with effective demand planning and outreach programs, to replace farm-saved seeds with higher-yielding alternatives
10. Support for crop-focused clusters: We look forward to initiatives promoting crop-specific clusters equipped with specialized machinery, affordable inputs, and advisory services to drive productivity and profitability
11. Strengthened FPOs: We expect stronger support for Farmer Producer Organizations (FPOs) through training, storage facilities, and better access to institutional credit. Facilitating value addition opportunities would further enhance market access for FPO members
Insurance – Attributed to Vishal Bhave, Practitioner Partner, Insurance at Praxis Global Alliance
The period before every budget is laced with expectations of the Industry from the Finance Minister. This year, from an insurance standpoint, given the aspiration of “Insurance for all by 2047”, it is imperative to implement measures to boost Insurance penetration. While on the supply side, IRDAI is aggressively rolling out measures to enable ease of doing business and promoting the cause of Insurance, there is a need to address the demand side as well.
The Insurance sector’s wishlist includes doubling of deduction limits under Section 80D for Health Insurance and a separate limit for Term and Pension under Section 80C. There are suggestions to include exemptions for Insurance under the New Tax Regime.
While, one is not too sure of the above given the Government’s stated stance to move away from exemptions in the New Tax Regime, what is doable and desirable is to revisit the GST rates – at least for Term, Health Insurance and Pensions. Moreover, higher budgetary allocation for Healthcare and setting up of a Regulator for Healthcare is important to regulate costs/patient experience at Hospitals and address medical inflation – which has a direct bearing on Insurance premiums.
Private Capital – Attributed to Akshat Gupta, Practice Leader, Private Capital at Praxis Global Alliance
Fiscal Consolidation
– The government should target a 4.5% fiscal deficit for FY26. This would boost investor confidence, lower borrowing costs, and attract more private investment by ensuring stable finances and manageable debt.
Increased Government Spending
– Increasing government spending on infrastructure (roads, railways, ports, airports) will drive economic growth as 1% GDP increase in infrastructure spending is estimated to raise GDP growth by up to 1.5%.
Tax on Gains and Reforms on Tax Regime
– Reducing long-term and short-term capital gains taxes would incentivize investment and enhance returns. Treating carried interest as capital gains, not ordinary income, and exempting it from GST to align with global fund management practices.
– Government may reduce the holding period for unlisted shares transferred under OFS in IPO to 1 year.
– Addressing the backlog of tax appeals and creating measures to prevent future disputes, ensuring a more predictable tax environment.
– Enhancing transparency and reducing bureaucratic hurdles through digital solutions to improve regulatory compliance.
Regulatory Ease
– Measures like National Single Window System, Alternative Dispute Resolution (ADR) mechanisms could be strengthened to ease regulatory burdens and streamline approval processes for businesses, making it easier for private equity firms to invest and operate in India
GIFT International Financial Services Centre (IFSC)
– The government should enable tax-neutral relocation of holding company structures to GIFT IFSC, as recommended by the Committee on Onshoring Indian Innovation, to attract FDIs
– Reduce the tax on dividends from shares listed on IFSC exchanges to 10% (from the current 20%) to enhance investor returns and incentivize direct listings in GIFT City.
