Government should support tech led innovation by providing incentive to companies & startups

Vineet Jain, CFO, Medtronic India shares his expectations from budget 2022 for healthcare and medical devices sector in India

We expect budget to bring structural reforms and simplifying taxation at macro level which will help boost demands. As far as healthcare and life science sector is concerned, COVID has taken significant toll and provided opportunity to increase the budgetary allocations by more than 1 per cent of GDP from current levels.

Following 6 key areas can be focused to improve the investment in healthcare/life science:

Innovation: Government should support tech led innovation by providing incentive to companies & startups working on providing easy access to healthcare and bringing new innovations for the benefit of patients.

R&D: Healthcare requires long gestation period and investment in R&D and in order to promote R&D in India, Govt should consider treating R&D in line with Manufacturing by providing similar incentive like PLI (Production linked incentive) and consider it as Make in India for product innovated from India

Focus on primary healthcare infrastructure: We all know that early screening and diagnosis is key for a patient being treated. Primary healthcare infrastructure in tier 2-tier 4 cities can significantly improve the burden on secondary healthcare system. Government spending and innovation led platform can certainly move primary health care infrastructure.

Skill development: Most developed countries are struggling with skilled manpower in the aftermath of COVID and it’s important to ensure India has enough skilled manpower in health care. Education programs, incentive for skill development, and public private partnership in skill development should be the focus in this budget.

Focus on cost of delivery to patients: Introduction of health cess in previous budget and higher duty structure has put a burden at the hands of the patients, Government should consider removing health cess given the duty structure in India is amongst the highest in APAC countries for medical device. It also makes sense to continue exemptions on duty for certain products and enhance this list to bring down the overall cost for patients.

Income tax exemption: From an income tax perspective, current limit of Rs 25k allowed for tax deduction (80D) on insurance payment needs to be re-looked given the cost of insurance and ability to cover the cost of some of the diseases. As per government statistics, 70 per cent of health care expenses are paid from savings and if this needs to be improved, tax breaks for insurance expenses should be considered increasing up to 100K.