Budget 2025: Healthtech startups urge creation of government-backed investment funds, AI and mental health push

Representative image

As the Union Budget 2025 approaches, startups building in the healthtech segment are calling for bold policy measures to address critical gaps and fuel innovation in the sector. From advocating for government-backed funding for deeptech health startups to pushing for increased investment in genomics research, mental health, and healthcare AI, industry stakeholders are urging the government to lay the foundation for advancements in diagnostics, personalised medicine, and rural healthcare access.

Laina Emmanuel, co-founder and Chief Executive Officer (CEO) BrainSight AI, a neuroscience startup, opened the conversation with a focus on the challenges faced by deeptech health startups in India.

Highlighting the long gestation periods and the high-risk nature of the sector, she pointed to the need for government-backed funding to de-risk early-stage ventures.

“Healthtech startups can take five to seven years before they start generating revenue,” Emmanuel explained. “No early-stage VC wants to take on that kind of risk. A government-backed ecosystem, similar to what countries like Singapore have, where funds are provided for research and early-stage risks are shared, could significantly accelerate the growth of deeptech startups in healthcare in India.”

Covid prompts further focus on health R&D spending by states: RBI report

She also emphasised the importance of mental health, often overlooked in healthcare policy discussions. “It would be great to see more budget allocation for mental health initiatives. Prioritising how insurance policies can cover mental health treatments would bring much-needed relief to countless individuals,” the CEO added, calling for greater focus on this critical yet underfunded area.

Dhruv Gupta, co-founder of OrangeHealth, a Bangalore-based diagnostics startup, shifted the discussion toward empowering consumers by increasing tax incentives for healthcare spending.

"Healthcare costs are rising, and India’s population is aging," Gupta said. "The current tax deduction limit for healthcare expenses, capped at Rs 5,000 annually, is inadequate. Increasing this limit would allow consumers to spend more freely on essential healthcare needs, from diagnostics to treatment. It’s about enabling people to prioritise their health without financial hesitation."

Industry association FCCI also recommends increasing the tax exemption for preventive health check-ups under Section 80D from Rs 5,000 to Rs 20,000 besides additional depreciation upto 50 percent for diagnostics infrastructure, especially outside metro cities.

From AI beds to remote ICUs, startups are plugging India’s health gaps

Focus on AI

For Mudit Dandwate, CEO and co-founder of Dozee, which offers AI-based remote patient monitoring services, the focus is on positioning India as a global leader in health AI and innovation.

“India must prioritise and invest in becoming the global leader in health AI, driving advancements in digitisation, building a connected healthcare ecosystem, and enhancing the manufacturing capacity of indigenous medical devices,” he said.

Dandwate laid out a comprehensive plan to achieve this vision, including expanding the Production Linked Incentive (PLI) scheme to support health AI innovations, standardising GST rates at 12 percent for medical devices and software, and increasing customs duties on non-critical imports to boost domestic manufacturing.

“India has the talent and technological expertise to lead globally in AI-driven diagnostics, telemedicine, and predictive analytics,” he added. “With bold policy measures, we can establish ourselves as a healthcare technology powerhouse while delivering affordable, world-class care.”

Dandwate also pointed to India’s potential in medical tourism, envisioning the country as a global healthcare hub.

Suman Katragadda, CEO of Heaps.ai, a Hyderabad-based care management startup, turned the spotlight to the gaps in India’s healthcare infrastructure, particularly in rural areas.

“Many people currently have to travel long distances for primary healthcare needs,” he said. “The government must address this by identifying underserved areas in Tier 4 and 5 cities and improving local healthcare facilities. Investments in care management at both the state and national levels are also crucial to managing healthcare consumption more effectively.”

As per Traxcn data, there are 12,040 healthtech in India startups and this number will grow steadily.

Adding to the discussion, Surajit Chakrabartty, CFO, MedGenome, a diagnostics and research startup, emphasised the need for budgetary allocations toward genomics research and infrastructure, predicting that over the next 5-7 years, genomic testing will become an integral part of routine healthcare, driving advancements in personalised medicine and early disease detection.