Budget 2024: Healthcare sector calls for GST relief, R&D incentives, local manufacturing

Union budget 2024: India’s healthcare sector has high hopes for the upcoming budget on July 23, 2024. Experts expect a significant increase in healthcare spending. Investment in rural healthcare facilities and primary care is also expected to get a boost

The government could introduce policies to improve the quality and accessibility of essential health services. Lowering the GST on these services is one possible option.

Also read: Budget 2024 on July 23: Govt mulls doubling of Ayushman Bharat beneficiaries, insurance amount

Dr Ashutosh Raghuvanshi, MD and CEO, Fortis Healthcare, stressed that while the interim budget introduced several initiatives, the upcoming budget must prioritise healthcare infrastructure by increasing expenditure to GDP to 2.5%.

“We urge the government to make healthcare a national priority and implement transformative measures to establish India as a global healthcare powerhouse,” Raghuvanshi urged.

Key issues in healthcare

Raghuvanshi stressed that the healthcare sector is currently facing challenges such as shortage of skilled labour, indirect tax issues and unutilised Minimum Alternate Tax (MAT) credits.

“To ensure sustained and accelerated growth, we must focus on policies that are conducive to private sector investment,” he stressed.

“The government should strengthen public-private partnerships by introducing new models and policies to encourage adoption of digital healthcare services and promote medically valuable travel. This can be achieved by facilitating international insurance recognition for Indian healthcare providers to attract more international patients,” Raghuvanshi urged.

Diagnostics Sector

The diagnostics sector, which is vital for early detection of diseases and personalisation of treatments, is crucial to India’s growth, said Ameera Shah, executive chairman and whole-time managing director, Metropolis Healthcare.

“We urge the new government to prioritize optimizing PPP models to ensure high-quality, positive and impactful outcomes. Increased funding for screening and diagnostic programs targeting noncommunicable diseases (NCDs) such as cancer and heart disease is essential. Investing in training for doctors, nurses and allied health workers will further improve the quality of care,” Shah said.

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0% GST on diagnostic services

Shah demanded that introduction of 0% GST on diagnostic services and facilitating refunds of GST paid on import tax credits could reduce costs and improve accessibility.

Lowering import duties on imported diagnostic equipment and adjusting high VAT rates on laboratory supplies will increase efficiency and boost investment in research and development, he added.

“These measures will contribute significantly to our shared goal of providing accessible, quality healthcare for all. We look forward to working with the government to address these priorities and ensure the continued growth and improvement of India’s healthcare sector,” Shah noted.

Increase health care spending

Dr. Sabine Kapasi, gynecologist, co-founder and medical doctor at Enira Consulting and head of global strategy at the United Nations Emergency Response Agency (UNDAC), also stressed that stakeholders in the health sector are calling for far-reaching reforms.

“They propose to increase health spending to 3% of GDP, improve infrastructure in rural and disadvantaged areas and strengthen preventive health care. It is also essential to address the shortage of health personnel through better training and working conditions,” Kapasi urged.

Health insurance coverage

Kapasi also stressed the need to expand health insurance coverage, adopt advanced technologies such as telemedicine and digital health records, and comply with the India Digital Personal Data Protection Act, 2023.

The emphasis on emerging technologies such as AI and Machine Learning in the interim budget underscores the drive for modernisation in the sector, she added.

Incentives for R&D, local production

On tax policy, Kapasi said it is important to encourage local manufacturing and R&D activities.

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  • “Providing clarity on GST for business expenses and unifying rates for pharmaceutical ingredients are crucial for operational efficiency. Simplifying regulations and providing incentives for innovation and skill development can strengthen India’s healthcare capabilities and competitiveness,” Kapasi urged.

    Kapasi added that by investing in infrastructure, technology, human resources and regulatory clarity, the government can improve public health outcomes and support the growth of the pharmaceutical sector. Achieving these goals will be a major step towards a healthier and more prosperous India.

    Namit Singh Sengar

    Namit writes about personal finance, economics and brands. Currently contributing to

    first print: Jul 9, 2024, 1:36 PM IST