Services diversification is important for a firm to survive in crisis: Maneck Davar, Chairman, SEPC

In the current scenario, every service sector is facing the brunt of the pandemic, even the healthcare sector. Maneck Davar, Chairman, SEPC talks about how to drive possible opportunities in favour of the industry during a crisis situation, with Usha Sharma

How much is the healthcare services’ contribution to the Indian economy? And at what percentage is it growing?

With rising incomes, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene complemented by penetration of health insurance has led to a rise in healthcare spending, and the trend is likely to intensify in the coming decades. The hospital industry in India stood at $61.79 billion in 2017 and it is expected to increase at a Compound Annual Growth Rate (CAGR) of 16-17 per cent to reach $132.84 billion by 2022. According to Invest India, overall healthcare industry is projected to reach $372 billion by 2022. As far as the export of healthcare services is concerned, services trade data is still in a nascent stage and government is working to formulate better measures to capture the service trade in a more structured manner. However, in the current scenario, RBI collects data from a balance of payments and records healthcare as a subsector of travel which denotes $105 million healthcare-related travel exports for the financial year 2018-19.

How much focus does Services Export Promotion Council (SEPC) have in the healthcare sector, and what kind of support does it extend to the industry, especially hospitals, med-devices, IVD and allied industries in India and globally?

The healthcare market in India is expected to reach $372 billion by 2022, while medical devices market is expected to cross $11 billion by 2022. However, we would be soon reassessing the growth in view of the impact of COVID. SEPC has been working on several fronts to promote India’s healthcare sector in international markets. We organise reverse buyers-sellers meet and knowledge sessions in our international events; Global Exhibition on Services (GES) and India Heals organised by SEPC under the aegis of the Ministry of Commerce. SEPC also participates in various international fora on the healthcare sector. We also publish sectoral reports with the objective of showcasing India’s healthcare sector for foreign buyers. SEPC also launched India’s healthcare portal in 2015. Council keeps making policy representations to the government on behalf of the healthcare sector regarding issues and challenges faced by the sector.

What are the challenges you see while functioning in the healthcare sector? And what are your suggestions?

Presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. Superior quality healthcare, coupled with low treatment costs is benefitting Indian medical tourism, which has, in turn, enhanced the prospects of the Indian healthcare market. Treatment for major surgeries in India costs approximately 20 per cent of that in developed countries. India also attracts medical tourists from developing nations due to lack of advanced medical facilities in many of these countries. Having mentioned these core areas of strength and having earned credibility, healthcare sector indeed has a tough competition with service providers from countries like Thailand and Singapore. Visa issues for foreign patients and high government taxes are some of the factors that pose some challenges.

In the current scenario with lockdown around the world, every service sector is facing the brunt of the pandemic, even the healthcare sector. Foreign patients have been completely stopped and even domestic patients are not visiting hospitals for their referrals except the ones who are suspected of COVID-19. Most of these patients have to be provided for free hospital care. There is no revenue generation at the moment and the compliance costs have risen manifold.  Our recommendation to the government is certainly to extend the SEIS scheme with higher incentives and exempt services exports from GST as it has been the case with merchandise exports. In the current crisis, government needs to share the burden of running costs of hospitals like electricity, wages, rents, etc.

Tell us the impact of COVID-19 on medical tourism, and how soon do you see the revival in the industry?

As a result of COVID-19 pandemic, elective surgeries done under MVT are not being performed as there is a complete lockdown on this segment of medical treatment and no foreign patient is allowed to enter into the country in view of safety. The business done under MVT in January, February and March of 2020 is equal to the stand-alone business done in the month of December 2019. The revival of the industry will depend on the measures taken by the government post-COVID-19 and how quickly the restrictions on the travel of foreign patients are removed. To give an optimistic time frame, I believe the industry would take somewhere around one-and-a-half year to come back to the track where it was moving before the pandemic.

How significant is SEIS to the healthcare sector?

The SEIS benefits to hospital services with the Central Product Classification Code (CPC) 9311 has grown at the rate of 34 per cent during 2015-18, which itself signifies how the healthcare sector is bringing in a handsome amount of foreign remittances in the country. With the help of SEIS scrips, hospitals import machinery, medical equipment and chemicals, which are not readily available in India. SEIS benefits bring down the healthcare charges making services competitive in the international market.

India is already suffering from a lack of human resources. At the same time, there is an exodus of nurses and doctors from India. What role do you think the council can play in striking a balance?

Yes, it is true that India has still not been able to maintain the ratio of healthcare professionals to its population mandated by the World Health Organization (WHO) norms, and at the same time, we do face a brain drain in many of skilled sectors including healthcare. The SEPC recently conducted a study on the demand and supply of healthcare professionals in India and submitted to the government. We are planning to publish a brief of the study in our upcoming newsletter. It will spread awareness in the industry as well.

Currently, what is the impact of COVID-19 on the council members and the organisations aligned to it?

The impact of COVID-19 in the services sector is deep with India’s services sector activity contracted by almost 50 per cent. For some sectors like tourism and Medical Value Tourism (MVT), it is almost 100 per cent. Demand has badly fallen, especially in overseas markets; no new orders being received and payments of previous project deliveries are stuck. Unlike manufactured items, services are not something that may be processed and stored for future sale when the economy recovers. There is a complete waste of human resources at firms. With no (more) business firms running out of revenue, they are not able to generate enough money to pay for the running costs including salaries and rents. Additionally, most of the services are highly correlated with human resources and generate huge employment, which is at stake. Services sectors are highly interconnected with each other, disturbance in one services sector has a multiplier effect on all other services sectors. For example, when a foreign patient flies down from a foreign country, he travels in taxis, stays in hotels, gets treatment in hospitals, visits tourist destinations, hires guide and so on and so forth, giving business to many services sectors.

The impact of COVID-19 is seen in the global economy, what measures does the healthcare industry need to take to lessen the burden?

In the purview of the deficiency of medical workforce, medical degree pursuing students including MBBS who are in the final year may be awarded degrees without final exams and asked to start serving the nation and with the recent notification on teleconsultation, which has provided a legal framework for medical practice, will certainly be a great relief in current times to lessen the burden on the healthcare workforce.

List the key learnings from the healthcare services industry during the COVID-19 and what support/programmes will the council be initiating for the healthcare service industry, post COVID-19?

Services diversification is important for a firm to survive in a crisis situation, the hospitals that were completely dependent on foreign patients are affected more. Firms should be ready to quickly adapt to market changes, hospitals that experimented new techniques like telemedicine are able to utilise their human resources and reach out to patients. SEPC is organising webinar series on issues of healthcare sector and planning to organise virtual RBSM very soon. Furthermore, besides making representations to the government for special relief package, SEPC will be working closely with the government to ease out VISA restrictions to facilitate MVT post-COVID-19 lockdown.

Recently, the President of India has passed an ordinance to ensure adequate protection to the healthcare community and prevent any violence against them. How will this move encourage and provide assurance to the healthcare service industry?

There has been a lot of stigmatisation and ostracisation faced by the healthcare workforce during the ongoing pandemic and even before COVID-19, they had been victim of unwarranted violence and harassment. It tends to hamper the medical community from performing their duties to their optimum level and maintaining their morale. It was a critical need in this hour of the national health crisis that they receive full cooperation and support from society. I believe the ordinance will provide safety and assurance to the healthcare community and increase the confidence of healthcare service providers.

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