The author highlights how rising demand, policy support, and private investment are reshaping India’s healthcare growth in tier-2 cities
Vineet Aggarwal, Group COO, Paras Health
India’s healthcare future will be written not only in its megacities but along the quieter avenues of its tier-2 towns. A combination of rising demand, policy thrust, expanding private capacity, and improving connectivity is shifting the centre of gravity. That shift is not incremental; it is structural, and it matters for patients, clinicians, and planners alike.
Rising demands beyond metros
The first signs of this transition are visible in how demand itself is changing (1). Rapid urbanisation of smaller cities, the spread of salaried employment, and greater health awareness mean that more people in tier-2 centres are seeking specialist care close to home. Industry estimates indicate that a substantial share of incremental healthcare demand over the coming decade will come from tier-2 and tier-3 locations, reversing the traditional pattern where metropolitan areas captured the most growth. For health systems, this spells both opportunity and obligation: the unmet need in these corridors is large, and addressing it requires deliberate investment in facilities, diagnostics, and trained staff.
Alongside this demand shift, the economic rationale is also becoming undeniable. The hospital market in India is valued at hundreds of billions of dollars and is projected to continue growing steadily. Investors and hospital chains are recognising that lower land and operating costs, combined with a growing middle class, make tier-2 cities attractive for sustainable expansion (2). That movement is already visible; several leading chains are accelerating projects outside big metros, creating multi-specialty centres that can perform complex procedures at scale. The result is a broadened geographic footprint for advanced care.
Reinforcing these trends, public policy (3) is creating fertile ground for expansion. Central initiatives such as the Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and the Ayushman Bharat Health and Wellness Centres (AB-HWCs) programme, together with higher budgetary allocations for the National Health Mission (NHM), are improving the baseline capacity in smaller cities and districts. Schemes that expand insurance coverage and fund diagnostic and wellness centres reduce financial and logistical barriers for patients, and make it more feasible for secondary hospitals to provide reimbursable, quality care. This public-sector push reduces the risk for private entrants and raises the standard of what patients can reasonably expect locally.
Bridging the gap between infrastructure and expertise
Supply, however, must keep pace with aspiration. Building a hospital is not only a matter of bricks and equipment; it is about people and processes. Tier-2 expansion requires investment in talent pipelines, postgraduate seats, nursing training, allied-health apprenticeships, and scalable clinical governance (4) so outcomes remain consistent across sites. Telemedicine and hub-and-spoke models can bridge immediate gaps, but long-term resilience depends on on-ground expertise.
Finally, the human stakes are profound. For families in smaller cities, access to timely cardiac care, cancer surgery, maternal-fetal medicine or advanced diagnostics can mean the difference between recovery and prolonged hardship. When high-quality services are available locally, patients avoid costly travel, clinicians retain continuity of care, and entire communities benefit from earlier diagnosis and prevention. The ethical and economic dividends of decentralising care are therefore interlinked.
Final thoughts
India’s tier-2 corridors are not a peripheral story; they are the next chapter in the nation’s healthcare narrative. Policymakers, health systems, and investors must act with urgency and humility; urgency to meet surging demand, and humility to design services that respect local needs, workforce realities, and financial constraints. If that balance is struck, the gains will be measured not only in market expansion but in healthier lives across towns that have, until now, been underserved.
Reference:
- https://unlistedintel.com/deep-dive/the-private-capital-view-on-indias-healthcare-sector/?utm
- https://www.businesstoday.in/magazine/deep-dive/story/how-indias-hospital-chains-are-entering-an-aggressive-phase-of-expansion-in-tier-iiiii-cities-486660-2025-07-28?utm
- https://prsindia.org/budgets/parliament/demand-for-grants-2024-25-analysis-health-and-family-welfare?utm
- https://www.niti.gov.in/sites/default/files/2023-02/InvestmentOpportunities_HealthcareSector.pdf?utm