India’s hospital sector poised for up to 12% CAGR over next 3-5 years

Healthcare expenditure increased by 9.8% YoY in the Union Budget FY26.

India’s hospital sector is expected to expand at a compound annual growth rate of up to 12% over the next three to five years, according to a CareEdge Ratings report.

The sector’s growth is attributed to increased government focus on healthcare delivery, the rising prevalence of lifestyle-related and communicable diseases, expanding medical tourism, and higher disposable incomes.

Healthcare expenditure increased by approximately 9.8% year-on-year to $11.1m (Rs 99,858 crore) in the Union Budget FY26.

Since the onset of COVID-19, the industry has experienced structural shifts marked by higher health awareness, broader insurance coverage, wider acceptance of elective procedures, and gradual price adjustments, the report said.

However, India continues to lag global benchmarks on healthcare infrastructure despite accounting for nearly one-fifth of the global population.

Healthcare expenditure has historically been 2 to 4% of GDP, below the worldwide average and significantly lower than in several emerging economies, such as Brazil, Mexico, Russia, and Thailand.

“This sustained underinvestment has resulted in one of the lowest hospital bed densities globally, it added.

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