Indian Healthcare Sector: A Quick Recap 2025

In the Indian economy, healthcare is a nuanced sector that faces its own set of challenges, risks and opportunities. In terms of opportunities, the year 2025 has presented a very distinct set of tasks and growth avenues. The Economic Survey 2024-25 presented in January 2025, highlighted Government-supported insurance schemes, including Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (“AB PM-JAY”), Rashtriya Swasthya Bima Yojana and various State programmes, that contributed to approximately 2.63% of the overall healthcare financing. Increased public investment in social security and primary healthcare under AB PM-JAY has reduced out-of-pocket expenditure, generating estimated savings of over INR 1.25 lakh crore.

In the Union Budget 2025-26, the Government of India announced several initiatives to strengthen the healthcare sector. Gig workers on online platforms are proposed to be covered under AB PM-JAY, benefiting nearly 1 crore workers. Medical education aims to get an additional 10,000 seats towards a five-year goal of 75,000 seats. To improve cancer care, day care cancer centres are proposed to be established in all district hospitals within 3 years, starting with 200 centres in 2025-26. The Government aims to promote medical tourism and the ‘Heal in India’ initiative through private sector partnerships and easier visa norms.

Supported by conducive policies, the Indian healthcare sector has received approximately USD 971 million in funding through venture capital, private equity and other investments, primarily in hospitals, diagnostics and digital health1. India’s healthcare sector is set to become one of the most attractive global destinations for healthcare investments. Foreign direct investments in hospitals and diagnostics have touched USD 1.56 billion in FY 2025, i.e., 2.3 times higher than FY 2022, with single-specialty hospitals now accounting for over 40% of private equity deals.

Cross-Border Collaborations and Trade Developments

After much deliberation, India and the United Kingdom (“UK”) signed the Comprehensive Economic and Trade Agreement (“CETA”) on July 24, 2025. The CETA offers an opportunity to the Indian healthcare and pharmaceutical sector by opening pathways for Indian drug manufacturers to expand in the UK, including access to Government procurement schemes such as the National Health Service, while also allowing India to benefit from advanced British healthcare technologies. At the same time, it preserves India’s key safeguards on patents and regulation, ensuring that affordable generics and biosimilars remain available. By fostering collaboration in biotechnology, joint research and supply chain resilience, the pact deepens bilateral ties and supports improved healthcare delivery and global health preparedness.

Sector-Wide Policy Focus Areas

To uplift the healthcare sector, the Government of India is focused on all aspects of this sector including medical devices, pharma, cosmetic, medical education.

Medical Devices

In 2025, with the objective to uplift the skill development in the medical devices field, the Department of Pharmaceuticals (“DoP”) issued an addendum to the operational guidelines under the Capacity Building and Skill Development for Medical Devices sub-scheme, introducing 3 changes:

(a) Central Government universities and institutes offering multidisciplinary postgraduate medical-device courses can now receive up to 75% reimbursement of course costs or INR 21 crore, whichever is lower;

(b) financial assistance for diploma, certificate and short-term training programmes will be provided to eligible institutions through quarterly, enrolment-based reimbursements; and

(c) non-recurring expenditure claimed under the scheme will no longer need to be refunded even if a programme is discontinued or scheme conditions are not fully met, providing greater financial certainty to institutions.

Further, DoP, through its notification dated October 1, 2025, released the Guidelines for Promotion of Research and Innovation in the Pharma MedTech Sector Scheme, aimed at boosting industry-led research and development, strengthening research quality and deepening industry-academia collaboration to enhance India’s global competitiveness.

Lastly, to streamline the compliances and disclosure requirements, DoP amended the Uniform Code for Marketing Practices in Medical Devices (“UCMPMD”) 2024. It prescribes how free evaluation samples should be valued. The amendments clarify how companies must calculate the value of free samples, using the per-unit stockist price if they manufacture the samples, or the purchase price/average annual price if they buy them from another supplier. A new UCMPMD compliance portal has been introduced. The company’s Chief Executive Officer is now responsible for ensuring compliance, and annual marketing-expenditure disclosures must be submitted within 2 months of the end of the financial year or uploaded on the association’s website.

Drugs and Cosmetics

In February 2025, the Drugs Rules, 1945 (“Drugs Rules”) were amended to grant additional time to small and medium pharmaceutical manufacturers (with a turnover of up to INR 250 crore) to comply with the revised good manufacturing practices set out in Schedule M. Eligible manufacturers are permitted to apply for an extension by submitting Form ‘A’ to the Central Licence Approving Authority within 3 months from the date of the notification, along with an upgradation plan. Upon approval, the compliance deadline will be extended to December 31, 2025 (revised from the earlier deadline of December 28, 2024). Pursuant to this, on March 24, 2025, the Central Drugs Standard Control Organisation (“CDSCO”) issued a circular regarding the submission of applications for applicants/manufacturers seeking an extension of time to comply with the revised good manufacturing practices norms through the newly developed Online National Drugs Licensing System (“ONDLS”) Portal.

The Drug Rules, 1945 were further amended in August 2025 to mandate the inclusion of qualitative details of excipient into the data stored in the label of drug formulation products as bar code or Quick Response (QR) code. The amended rules are set to come into force on March 1, 2026.

For enhanced transparency and accountability, the Cosmetics (Amendment) Rules, 2025 introduced clearer labelling definitions by explaining that “use before” means before the first day of the stated month, while “expiry date” means the last day of that month. The amendments also
introduce a new rule allowing the state licensing authority to suspend or cancel licences for non-compliance (with a 90-day appeal window) and permit exported cosmetics to omit the manufacturer’s name and address if a state-approved code is used instead.

To create a structured and efficient alternative to prosecution for certain drug-related offences, the Ministry of Health and Family Welfare issued the Drugs and Cosmetics (Compounding of Offences) Rules, 2025 aimed to establish a mechanism for compounding certain drug-related offences. Pursuant to this, cases can be resolved more quickly while still ensuring regulatory compliance, accountability and proper oversight within the pharmaceutical sector.

In October 2025, CDSCO reiterated strict compliance with the Drugs Rules to ensure the quality and safety of pharmaceutical products. Under Rules 74(c) and 78(c)(ii), manufacturers are required to test each batch of raw materials and each batch of the final product in their own or an approved laboratory, and maintain records as prescribed in Schedule U.

Ease of Doing Business

To align with the Digital India mission, CDSCO introduced several digital and automated processes to simplify the regulatory requirements and enhance ease of doing business for the pharmaceutical and medical device sectors. These include the auto-generation of market standing certificates and non-conviction certificates for licensed medical devices through an upgraded online workflow, eliminating the need for manual processing and reducing timelines. CDSCO has also launched a new online dual-use system on the SUGAM portal to streamline the issuance of no-objection certificates (“NOCs”) for bulk drug imports intended for non-medicinal use. As part of this initiative, one-year NOCs may now be issued subject to prescribed conditions.

Additionally, CDSCO has mandated complete digitisation of applications for World Health Organization draft text on Good Manufacturing practices Certificates of Pharmaceutical Product by requiring all submissions to be made exclusively through the ONDLS portal from August 15, 2025, onwards. State Licensing Authorities have been advised to ensure appropriate mapping of officials and verification procedures to support timely approvals.

Key Takeaways

Cumulatively, the developments in 2025 reflect a decisive and coordinated push by the Government of India to strengthen the healthcare ecosystem multifold, across financing, infrastructure and regulation. Expanded public insurance coverage, targeted fiscal support and sustained private and foreign investment underscore the sector’s growing economic significance. At the same time, regulatory reforms across medical devices, drugs and cosmetics - coupled with increased digitisation and compliance rationalisation - demonstrate a clear emphasis on ease of doing business.

(Sidharrth Shankar is a Partner and Achint Johri is an Associate at JSA – Advocates & Solicitors. Views are personal and not of the Firm.)