Budget commentary from Hitesh Sharma, Tax Partner, Life Sciences Practice, EY India
A mixed bag for the Health Services and Pharma Sector. On the positive front, with this budget, effectively the government is trying to widen the ambit and affordability of healthcare in the country through emphasis on eradication of TB by 2025, expansion of Mission Indradhanush to cover 12 more diseases, including five new vaccines, expansion of Jan Aushadi Kendra Scheme to all districts offering 2000 medicines and 300 surgicals by 2024, etc. This is a positive note for overall wellness theme.
On infrastructure front, Government proposes to setup more hospitals in tier 2 and tier 3 cities through PPP model under PM Jan Arogya Yojana. Also, acknowledging that there is a shortage of qualified medical doctors, both general practitioners as well as specialists, the Government proposes to incentivise hospitals which allow attachment to a medical college through a PPP model. Additionally, those states that allow such synergies and wish to provide land at a concession, would be able to receive Viability Gap Funding.
Recognising the future of healthcare and medicine, the Government is proposing two new national level schemes to support mapping of India's genetic landscape which will be critical for next generation medicine, agriculture and for bio-diversity management.
Further, governments overall focus on digital and technology has its imprints on healthcare sector as well, with the proposed digital platform to facilitate seamless application and capture of IPRs and institute of excellence for working on complexity and innovation in the field of IP.
The negative is really that a lot of funding for some of the above initiatives would come out of levy of duty (in form of Health Cess @ of 5% ad valorem) on import of critical medical devices. Additionally, it is also proposed to levy Social Welfare Surcharge @ 10% on import of certain medical equipment. These levies will increase the costs for the consumers thereby going against the moto of healthcare affordability.