Leading industry associations representing pharma, healthcare and medical devices manufacturing and service sectors expect Union Budget 2024 to announce a series of tax rate tweaks, infrastructure development facilitation measures and higher budgetary allocation to transform India's healthcare system in line with the Health for All agenda and the goal of achieving a Viksit Bharat by 2047.
The Indian Pharmaceutical Alliance (IPA), an association of 23 leading pharmaceutical companies in India which cumulatively accounts for 60% of domestic market sales, 80% of India’s medicine exports and 85% of private sector investment in pharma R&D, is seeking direct and indirect tax benefits from the Budget to encourage research and investment in the pharmaceutical sector.
“The industry is now at a pivotal moment, with an aspiration to grow to $120 billion by 2030. The policy direction should leverage the industry’s knowledge-driven foundation and its status as a global manufacturing hub. The thrust should be on quality and innovation. Given the high risk, lengthy development periods, and low success rates in research, continuous investment is crucial,” Sudarshan Jain, Secretary General, IPA, says.
Healthcare Federation of India (NATHEALTH), an association that has membership from across the healthcare ecosystem, calls for rationalising GST with a uniform 5% rate slab for healthcare and full input tax credit eligibility and reviewing health cess policies for medical technology entities to ensure affordability. NATHEALTH also wants the government to declare a National Priority status for the healthcare sector and facilitate better financing and offer tax incentives to encourage private sector investment in healthcare infrastructure, manufacturing, digital health, exports and education across India.
The Association of Indian Medical Device Industry (AiMeD), meanwhile, has sought an increase in customs duty on medical devices to a nominal 10-15% from the current 7.5% for medical devices to support local manufacturing. It has flagged the issue of 70% import dependency for medical devices. Trade margin capping by monitoring the MRP of imports and Income Tax benefits for CAPEX and R&D investments in the medical devices sector are the other demands made by the association.
“The imports of medical devices are consistently over ₹61,000 crore for the last three years and have increased by 13 per cent to ₹69,000 crore this year,” says Rajiv Nath, Forum Coordinator, AiMeD. Flagging their concerns in the prevailing inverted duty structure, AiMeD has proposed the implementation of a 5% health cess on custom duty for imported medical devices. “This correction is expected to harmonise the duty structure, making it more conducive for local manufacturers to thrive and be competitive globally and locally,” Nath says.
Leading industry players also spoke about the need for a budgetary push to accelerate the growth of the Indian healthcare sector.
"India’s healthcare needs a reform approach to pivot change and drive the sector as a core agenda for the future of the country. The 2023-24 budgetary allocation of ₹79,221 crores represented a drop from the 2022-23 allocation of ₹86175 crores. In the interim budget of Feb 2024, the finance minister earmarked an allocation of ₹90,171 crores. So over the last 3 yrs there has been no indication that healthcare is core to the government’s reform agenda. India’s public healthcare spending is still far below the target of 2.5% of the GDP. With each passing year not meeting that target pushes back long-term healthcare goals for the country”, Vishal Bali, Executive Chairman, Asia Healthcare Holdings says.
Raj Gore, CEO of Healthcare Global Enterprises Limited (HCG) says that he expects the healthcare sector to receive a substantial boost in budgetary allocation to meet the growing needs. “Priority should be given to implementing conducive policies that offer benefits through both direct and indirect taxes, along with the rationalisation of GST & custom duties. The budget should also prioritise improving the key health indicators, infrastructure, accessibility, and investment in medical research. Additionally, providing advanced training to medical personnel on early disease detection is crucial for enabling proactive intervention and immediate treatment,” Gore says.
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