NIMHANS 2.0, trauma care expansion
A major highlight of the healthcare announcements was the decision to establish NIMHANS 2.0, a national institute for mental healthcare in North India. Sitharaman noted that the region currently lacks a premier national mental health institution.
“There are no national institutes for mental healthcare in North India. We will therefore set up a NIMHANS 2.0 and also upgrade National Mental Health Institutes in Ranchi and Tezpur as regional apex institutions,” she said.
The government also announced a 50% expansion in emergency and trauma care capacity in district hospitals across the country through the establishment of dedicated emergency and trauma care centres, aimed at reducing out-of-pocket expenditure during medical emergencies.
Cancer drug relief, rare disease supportIn a move expected to provide immediate relief to patients, the Budget proposed a full exemption of basic customs duty on 17 cancer-related drugs and medicines. In addition, seven more rare diseases will be added to the list eligible for import duty exemption on drugs, medicines and food for special medical purposes imported for personal use.
“To provide relief to patients, particularly those suffering from cancer, I propose to exempt basic customs duty on 17 drugs or medicines,” Sitharaman said.
Ayurveda, AYUSH and global outreach
The Budget also placed renewed emphasis on traditional medicine, with the finance minister announcing the establishment of three new All India Institute of Ayurveda institutions to meet rising global demand for Ayurvedic healthcare.
Highlighting the post-pandemic acceptance of Ayurveda worldwide, Sitharaman said exports of high-quality Ayurvedic products could help boost farmer incomes through increased cultivation of medicinal herbs. She also proposed upgrades to AYUSH pharmacies, drug testing laboratories and the WHO Global Traditional Medicine Centre in Jamnagar to improve quality standards and availability of skilled personnel.
Skilled health workforce, allied professionals
As part of a broader employment and skilling push, the government announced large-scale expansion of allied health education. Existing institutions for allied health professionals (AHPs) will be upgraded, while new AHP institutions will be established in both private and government sectors.
The initiative aims to add 1 lakh allied health professionals over the next five years across disciplines such as optometry, radiology, anaesthesia, OT technology, applied psychology and behavioural health. In addition, 1.5 lakh caregivers will be trained over the next year under NSQF-aligned programmes focused on geriatric care, wellness, yoga and the operation of medical assistive devices.
Biopharma, long-term capacity building
Reinforcing the government’s longer-term vision, the Budget outlined a strong push for the health and biopharma sector, with a focus on domestic manufacturing, advanced technology and capacity building. Healthcare, Sitharaman said, is no longer just a social sector but a strategic pillar of economic growth.
Healthcare spending has seen a steady upward trajectory in recent years. In FY25, the government earmarked ₹99,859 crore for the health sector, up 10–11% from FY24. A significant portion of this was directed towards Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY), whose allocation rose to ₹9,406 crore in FY26 following expanded coverage for senior citizens, ASHA and Anganwadi workers, and gig workers.
Investment under the PM–Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) also increased sharply, reflecting a continued focus on strengthening primary, secondary and tertiary healthcare facilities, disease surveillance and pandemic preparedness.