The pandemic has brought to the fore the various lacunae of India’s healthcare sector and system – while highlighting to the world the tremendous power and resilience that it possesses. Healthcare has always been on the backburner and one of the most neglected field for Govts. Indian spending on healthcare in terms of GDP is very low in comparison to western world. VOH thought it germane to approach some leading minds from the healthcare space about their recommendations for, and expectations from, the 2021 budget. Here is what they shared :
Despite the overwhelming infrastructure challenges, the diagnostic and the healthcare industry has played an unrelenting role to save patient lives during the pandemic. The lack of adequate public health infrastructure in India combined with a high out of pocket expenditure imposes a high financial burden on Indian households and therefore increasing the healthcare budget allocation in the coming decade is of utmost importance.
Healthcare infrastructure should be prioritized so that production of indigenous healthcare equipment and medical technologies can increase.
The budget must be designed keeping in mind the requirements of the Atma-Nirbhar Bharat. Significant allocation must be reserved to boost indigenous manufacturing & research in healthcare.Also, provisions in the union budget must focus on incentivizing local manufacturing of medical devices to give an impetus to the ‘Make in India’ initiative.
Further to this, budget 2021 can prepare feasibility gap funding (VGF) options to further attract private sector investors in Tier 2 and 3 cities by focusing on Public-Private Partnership (PPP), and strengthening indigenous manufacturing of medical devices.
India needs an efficient solution to meet the challenges of its healthcare sector, especially high public expenditure, and therapeutic technology provides the most efficient solution for this.
Therapeutic technology solutions will certainly help in creating a comprehensive and integrated healthcare ecosystem in the country and will help in providing patients, access to high-quality and cost-effective care. The budget needs to focus on the expansion of high-quality healthcare with the potential to make healthcare more affordable and accessible by using technology to reach the grassroots level.
I urge the Government to provide an Investment Linked Incentive (ILI) much similar to the Production Linked Incentive (PLI) that they have introduced in several sectors to foster investments in India. Under the Investment Linked Incentive, they could consider allowing 50% of the incremental capital expenditure incurred for both New hospitals capex as well as Upgradation capex over the next 5 years as an incremental investment allowance deduction under the Income tax Act, in addition to the regular depreciation, which can foster sizeable new investments in hospitals across India.
‘AIMED has the following Budget recommendations for boosting the indigenous manufacturing of Indian Medical Device in 2021:
Predictable Tariff Protection Policy: We seek Nominal Tariff Protection for Devices being made in country and a Predictable Tariff Policy so if capacity is added by a Manufacturer there’s assured nominal protection. To promote domestic medical device industry that will subsequently reduce India's heavy reliance on import the Current Basic Import Tariff of 0-7.5% needs to be 15% for Medical Device (the Bound Rate under WTO is 40% Duty) and on their Components to be at least 5% & next year 7.5% as a PMP Make in India Enabler. Concessional Duty on Raw Material may be retained at 2.5% for now, for Next 3 Years. After GST, imported Devices are cheaper by 11% and Indian Manufacturers are challenged to compete with Chinese import in Government Tenders even for basic Products like Syringes, Thermometers, Examination Gloves & Blood Collection Tubes.
Indian imports of 42000 Crore Rs that account for 85% of the Medical Device Market are a Healthcare Security Risk that needs to be addressed. It is also an opportunity for Make in India’.
Budget 2021 must rationalize the tax liability on the sector to promote availability of affordable care, facilitate Make in India for Atmanirbhar Bharat and encourage exports in the sector to be able to contribute effectively to the economy.
The top 4 asks from the government are:
1. Introduce health cess on certain low end medical equipment and exempt parts/spares imported for servicing & maintaining medical equipment’s.
2. Basic customs duty to be reduced to Zero % to promote medical equipment, assemblies & parts manufacturing in India. This cost reduction can be passed on to hospitals, Diagnostic Centers, etc. in domestic Tier-2/Tier-3 cities and also will enhance our export capabilities.
3. Import Duty Rationalization for raw materials and finished goods to encourage indigenous manufacturing for making affordable devices available to the patients.
4. Exports promotion : Exports being the growth engine for the economy, it is important that efforts should be made to make it competitive in the international market. If we take a look at the India’s export performance in recent past, there has been a continuous decline and also impacting balance of trade. Direct tax exemption for the export profits would attract investment to export competitive sectors and will provide impetus to the sector.
1. Healthcare should be declared as a priority sector with all the deserving concessions.
2. The GDP spent on healthcare should be escalated to a minimum of 5%. If it is too much of asking, 4% to start with and 5% subsequently in two stages in the coming year.
3. The high GST rate always increases the cost of healthcare delivery to the consumer and it is very important to fix the GST at 5% flat in healthcare.
4. To improve the Quality of the hospitals in the country, accredited hospitals by NABH and International Accrediting Agencies like ACHSI and JCI should be given special consideration and special rates in the Government Insurance Schemes (ESI, CGHS, Ayushman Bharat, etc).
5. For the GoI insurance schemes like ESI, CGHS, etc, consider a better tariff so that the private sector will be motivated to provide care to this sector. The payment schedules are also extremely delayed, which causes a heavy burden to small and medium-size hospitals which should be improved upon.
6. Promotion of medical insurance becomes a real necessity for the post COVID world. This should include OP coverage which is not common in India. Either a co-payment system or a deductable system could be followed so that this will not be abused by the customers.
“While the healthcare segment has been a key focus area and part of country’s development plan through various comprehensive initiatives including Swachh Bharat, Ayushman Bharat, National Digital Health Mission and now ‘Mission Covid Suraksha, the long-term response to the virus needs a significant part of budget allocation.
The pandemic has reinstated the fact that, the government needs substantial investments in funding researches on infectious diseases and strengthening the capabilities of relevant institutions. Avian flu, SARS, MERS, Ebola, etc, are a clear example of the warning signals that the governments worldwide have ignored this segment for a long time, and now with bacterial infections becoming increasingly resistant to antibiotics, common infections can potentially become life-threatening in the future. To achieve this, it will be pivotal for government to join hands with private sector, while re-directing their focus on life science, healthcare and diagnostics. The healthcare policies need to take into account the entire value chain of healthcare - prevention of diseases, treatment and health insurance, to achieve the goal of universal health coverage.”
Given the global focus on health, we anticipate that this year’s union budget will have a larger thrust on health reforms.
Our expectation are largely for the Individual Taxpayers, who need a tax impetus. As they are the ones who are investing their hard-earned money for a potential health condition, which sometimes might seem like an extra measure rather than an essential investment. This is prominently because family health insurance premiums versus the tax benefits are skewed.
Hence it becomes important to increase the limits defined for mediclaim rpremium tax deduction under section 80D of the Income Tax Act to INR1,00,000/- ( INR50,000/- for self & spouse + INR 50,000/- for Parents). Further allowed dependent relationship should be re-looked. It is also crucial to reintroduce the medical reimbursement with higher limit of INR 50,000/- tax deduction which got merged in standard deduction during finance budget 2018.”
In order to ensure a level playing field between Indian and foreign diagnostics players, and to ensure seamless growth of the Indian diagnostics industry, the IVD industry expects:
1. The draft medical devices policy is yet to be implemented. This should be actioned immediately.
2. The prevailing inverse duty structure favoured finished products (imported IVDs) over raw materials (made in India IVDs) – consequently leading to an unequal playing field for all domestic producers of IVD devices. Need to cut down import duty on raw materials and hike import duty on finished goods, which is the lowest in India amongst the BRIC countries. This is very critical.
3. There should be a robust strategy for establishing ICMED as a robust Indian certification mark equivalent to the likes of CE and FDA.
4. Medical Devices manufacturing hubs, that provide the right mix of common infrastructure, facilities, and subsidies for technological upgradation to increase sustainability and economies of scale.
5. Aspects critical for winning the Make-in-India race are – ensuring a cost advantage over China, faster government permissions and single-window clearances, ease of doing business, adequate financing, competent infrastructure, and soft loans with longer repayments, and this should be key focus areas in the coming budget.
Expectations from Private healthcare
1. Declaration of Private healthcare as a priority industry with access to long term finance on the par with other infrastructure.
2. Setting up a Regulatory as well as Audit body for private hospitals on lines of TRAI or RERA to promote standardization and adherence to Clinical protocols /standard treatment guidelines.
3. Promotion of Ayushman Bharat scheme and bringing whole Indian population under its gamut.
4. Tax incentives /weighted deductions may be announced for companies that are keen on moving towards the maintenance of HER and health IT systems in the back drop of the “Digital India” initiatives.
Expectations from Public healthcare
1. Enhanced depreciation provisions for healthcare related capital investments.
2. Formation of a hospital finance corporation/bank on the lines of Power finance corporation, to look at long term investments in healthcare.
3. Increase spend on infrastructure creation and scaling up existing infrastructure through provision of safe drinking water, scaling up of immunization to reach even most remote areas, cleanliness and hygiene, improvement of maternity care, telemedicine push.
4. Focus on delivery of Mental health issues, Consumption of food and raw materials, handwashing, Golden hour concept for heart attacks and strokes through investments in the preventive aspects of healthcare delivery.
5.Given increasing trauma trends in India, investment in trauma prevention and early intervention by improvement of road infrastructure, lighting and proper signals as well as investment into fully equipped BLS and ALS ambulances and training of personnel.
Expectation: Insurance space
1. Reduced GST on healthcare insurance policies to the minimum rate.
2. Developing the back bone of a national health card scheme.
3. Increase budgetary provisions for group large scale insurance projects like RSBY.
Pitfalls to avoid
Not increasing the GDP spend towards the 2025 goal of 2.5% from the current 1.5%.
"It is our earnest recommendation that in the forthcoming budget, the public allocation for health should be increased in a graded manner to eventually reach 3% of GDP in line with the Government’s own stated intent to spend 2.5% of GDP on healthcare by 2025. A balanced approach to Healthcare Services Regulation coupled with a forward-looking policy framework , incentives to help the sector not only remain viable, but to bring further investment into the sector (including FDI), expand reach and bed density, invest in technology, foster a culture of innovation and retain the best clinical talent in India is a need of the hour . On GST ideal would be Zero rating along with a reduction in rate of applicable tax for companies with unadjusted MAT credit. Last but not the lease a graded introduction of Mandatory Health Insurance to ensure Universal Healthcare Access to supplement PMJAY."
My key ASKS from Budget 2021 are:
1.The government should consider making Healthcare more affordable by making zero rating of GST for Healthcare service.
2. Focus on prevention Healthcare and Mental Health.
3. Improving public-private partnership in education and research.
COVID-19 has exposed the massive vulnerabilities in the Indian healthcare system. Also, we have witnessed the role of private institutes and hospital in managing such crisis and helping the government. Focus on PPP model in my opinion will certainly bring down the burden on both the government and the private players. And at the same time an impact is created in the society by offering affordable and quality care. Budget 21 should encourage and provide infrastructure to the private players and provide accessible, affordable and quality health coverage to all.
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