Union Budget FY23: From tax reforms to investment boost, here's what the healthcare and pharma sector expects

1 Feb 2022 , 07:45 AM

The healthcare and pharma sector has been the heart of economic recovery in this ongoing Covid pandemic. The virus led to the requirement of building a robust healthcare infrastructure in India. That said, the sector will have a share of focus during this Union Budget 2022-23 and some major reforms can be expected. Recently, the government has unveiled policies such as the PLI scheme for APIs / KSMs and medical devices and the promotion of bulk drug parks, which is in line with Atmanirbhar Bharat.

However, CARE Ratings in its Budget 2023 expectations report stated that during the current environment, the probable major point of the agenda would be on achieving affordable healthcare for the entire populace, especially Tier I and Tier-II cities.

Here’s what CARE expects for the sector:

To meet the objective of accessibility and affordability of healthcare to all. The government is likely to concentrate on the development of infrastructure mostly through public-private partnerships. The Budget may see some favourable changes in taxes for the manufacturing of medical equipment to encourage domestic production.

Introduction of tax holidays for the hospitals that are set up in rural areas at least for the initial years.

Attracting the healthcare space with the inflow of investments by providing the viability gap funding. This would likely facilitate the government in achieving the goal recommended by WHO for the doctor-patient ratio of 1:1000 by 2024.

Currently, healthcare services are free from GST except for a few elements of the services, which sometimes account for a substantial portion of the operational costs. Thus, any announcement to bring more life-saving drugs in the nil GST category will enable the provision of more affordable healthcare services to a large populace.

Promotion of innovation and research through introduction of tax incentives for investment in setting up of R&D based activities

Favourable changes in taxes for manufacturing of medical equipment to encourage domestic production.