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While pharmaceutical firms see boost in accessibility, diagnostic providers expect better support for early disease detection
By cutting GST on medicines, exempting lifesaving drugs, lowering levies on devices and diagnostic kits, and removing tax on health and life insurance premiums, the GST Council has aimed to ease the treatment burden.
The government’s decision to slash Goods and Services Tax (GST) on medicines, diagnostics, medical devices and health insurance has been hailed across the healthcare industry as a major relief for patients and a long-awaited reform for the sector.
By cutting GST on medicines from 12 per cent to 5 per cent, exempting lifesaving drugs, lowering levies on devices and diagnostic kits, and removing tax on health and life insurance premiums, the GST Council has aimed to ease the treatment burden, improve affordability, and expand access to essential care.
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Industry stakeholders say the reform addresses multiple pain points at once—reducing out-of-pocket expenses for patients, expanding demand for affordable drugs and therapies, enabling wider use of medical technology, and aligning India’s tax framework with global practices. While pharmaceutical firms see a boost in accessibility, diagnostic providers expect better support for early disease detection, and device makers underline competitiveness if refund bottlenecks are resolved. Hospital groups, meanwhile, predict greater insurance penetration and lower “embedded costs” in patient care.
“Prime Minister Narendra Modi has given the biggest Diwali gift to the nation through these path-breaking GST reforms…He delivers whatever he promises,” Piyush Goyal, union minister of commerce and industry, said during the inauguration of 11th edition of iPHEX 2025, organised to boost Indian pharma exports by Pharmaceuticals Export Promotion Council of India (Pharmexcil).
“India stands strong and united, with the confidence to withstand challenges just as we have done in the past. Our healthcare and pharmaceutical sectors have always been at the forefront. During Covid-19, the industry put lives at risk but ensured that our country never faced a shortage of medicines.”
He added, “India also supported over 100 countries by providing vaccines and essential drugs at free or nominal cost, without profiteering, living up to our responsibility as the pharmacy of the world.”
Domestic & Foreign Drug Makers Hail Move
“For the pharma industry, this move is likely to boost demand as affordability increases and patients gain easier access to essential treatments and this is also likely to increase purchase volumes,” said Nikkhil K Masurkar, CEO, Entod Pharmaceuticals. He added that reducing GST on all medicines to 5 per cent and exempting key life-saving drugs has “directly addressed the burden of treatment costs for patients”, while lower GST on devices and diagnostics will improve access to critical care for those managing chronic illnesses.
The pharmaceutical industry body, which represents top domestic drugmakers including Sun Pharma, Glenmark, Lupin, Dr Reddy’s among others, also expressed strong support.
Sudarshan Jain, secretary general, Indian Pharmaceutical Alliance (IPA), said, “The Indian Pharmaceutical Alliance welcomes the government’s decision to exempt life-saving and cancer medicines from GST, a step that will bring direct relief to patients and their families. Equally, the reduction in GST on a wide range of medicines from 12 per cent to 5 per cent will help ease the overall treatment burden and make essential therapies more affordable.”
Anil Matai, director general, Organisation of Pharmaceutical Producers of India (OPPI)—lobby of foreign drugmakers such as MSD, Sanofi, Eli Lilly, Novo Nordisk among others—commended the government for the far-reaching GST reforms announced for healthcare. “The decision to reduce GST on lifesaving medicines—bringing 33 essential drugs from 12 per cent to NIL and 3 critical drugs for cancer, rare diseases, and other severe chronic conditions from 5 per cent to NIL is both historic and compassionate.”
This “bold step” will significantly reduce the financial strain on patients and families. “By realigning the GST structure, the government has sent out a strong signal of prioritising patient well-being and strengthening India’s journey towards universal health coverage.”
‘Transformative’: Medical device makers & diagnostic firms support GST cut
Medical device makers also lauded the reform. Himanshu Baid, managing director, Poly Medicure, said, “This progressive reform will directly benefit patients by lowering treatment costs, improving affordability, and expanding access to essential medical technologies. It is a transformative step that will strengthen India’s healthcare system and advance the vision of affordable healthcare for all.”
Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry (AiMeD), welcomed the path-breaking decision to reduce GST from 12 per cent to 5 per cent if “refund on accumulated GST due to the inverted GST structure will be made within 7 days as being informed, as our inputs are usually at 18% leading to accumulated GST credit blocking our working capital”.
He urged the government to also allow GST refunds on services and capital goods “as is the case in other progressive countries like Australia, Singapore & Canada,” and sought a transition period to switch packaging material under anti-profiteering provisions.
From the healthcare services side, Dr Harsh Mahajan, founder & chairman, Mahajan Imaging & Labs and chairman, FICCI Health Services Committee, said the reduction of GST on devices, kits and reagents to 5 per cent was “in line with long-standing recommendations of FICCI”. He also welcomed the removal of GST on health and life insurance, calling it a step that “will certainly lead to higher insurance coverage across the country and reduce out-of-pocket expenses.” However, he flagged that equipment maintenance service contracts, still taxed at 18 per cent, should also be brought down to 5 per cent as hospitals and diagnostic centres do not get input tax credits, leading to “embedded taxes” and higher patient costs.
Industry leaders agreed that the reforms, if implemented smoothly, will not only ease costs for patients but also improve healthcare access across the country.
According to Ameera Shah, president, NATHEALTH and promoter, executive chairperson, said the reduction of GST on diagnostic kits, reagents and medical technology items “is in line with NATHEALTH’s long-standing recommendations” and would “enhance access to quality healthcare services, support early disease detection, and bring greater consistency by standardising GST rates across preventive, curative and rehabilitative care.”
NATHEALTH stands for the Healthcare Federation of India. It is an industry body representing the entire healthcare ecosystem, including hospitals, diagnostic chains, medical technology providers, insurers, and healthcare service companies.
About the Author
Himani Chandna, Associate Editor at CNN News18, specialises in healthcare and pharmaceuticals. With firsthand insights into India’s COVID-19 battle, she brings a seasoned perspective. She is particularly pass…Read More
Himani Chandna, Associate Editor at CNN News18, specialises in healthcare and pharmaceuticals. With firsthand insights into India’s COVID-19 battle, she brings a seasoned perspective. She is particularly pass… Read More
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