Set up Rs 10-bn pharma technology upgradation fund: Dr Rajeev Boudhankar

Budget should make the announcement on providing infrastructure status to the hospital industry

Dr Rajeev Boudhankar, CEO, Bhatia Hospital

Last Updated : Jan 17 2017 | 3:23 PM IST

With advancement in technology and our current government supporting promoting healthcare and pharma industry, the upcoming 2017-18 budget has lot of expectation to boast the industry.

Priority sector status to healthcare including hospitals and diagnostics centres along with tax benefits is not enough from investments' point of view hence budget should make the announcement on providing infrastructure status to the hospital industry. The healthcare expenditure should increase to 5 percent of the GDP in next 5 years.

Government should allow weighted deduction of 350 percent on approved expenditure incurred on R&D activities pertaining to indigenous development of medical technology, biotechnology. Exempt from Minimum Alternate Tax (MAT) for healthcare sector. Government should plan to set up an Rs 10 billion pharma technology upgradation fund. The specific focus on pharma will help drive the focus on innovation especially in the area where Indian companies have historically had a significant global advantage.

Greater provision should be made for the National Rural Health Mission and National Urban Health Mission at least Rs 50 thousand crore each. Government should promote health insurance penetration throughout the country through local post offices and Aadhar card centres. Direct tax benefits for capital expenditure, a 10-year tax holiday for hospital projects

GST should be completely exempted from healthcare industry. The new health protection scheme of last budget should be extended to provide health cover up to Rs 3 lakhs per family for all families below the poverty line with an additional top-up package up to Rs 1 lakhs for senior citizens. Under Prime Minister’s Jan Aushadhi Yojana, 1 lakh stores should be opened during FY 17-18. ‘National Dialysis Services Programme’ started under National Health Mission through PPP mode to be extended to all 2 and 3 tier cities and taluka headquarters.

Indian Council of Medical Research (ICMR) has 32 institutes that are suffering due to lack of funds for upgrading the infrastructure, maintain equipment, buying consumables and to conduct field studies. At least Rs 10,000 crores should be allocated for the same. Many projects are not on track because of this lack of funds. Preventive Health Check-ups Tax exemption on preventive health check-up should be raised from the current Rs 5,000 to a maximum of Rs 20,000 under section 80-D of the Act. Tax exemption on medical expenses should be increased, the current tax exemption limit of Rs 15,000 per annum towards reimbursement of medical expenditure by the employer is inadequate in comparison with the medical expenses incurred by the taxpayer and needs to be increased to at least Rs 50,000 per annum.

Tax incentives for specified activities

Tax incentives may be provided for the following activities:

Digitization: To boost the ‘Digital India’ initiative of the government, financial incentives/grants should be provided to institutions that are willing to move towards maintenance of electronic health records (EHR) and health IT systems. Deduction on investment made for the implementation of EHR (at present 250 percent) should be extended. Accreditation: To incentivise hospitals and diagnostic laboratories to undergo accreditation, there should be 100 percent deduction on approved expenditure incurred for securing accreditation from National Accreditation Board for Hospitals and Healthcare Providers (NABH) and National Accreditation Board for Testing and Calibration of Laboratories (NABL) respectively.
Customs duty on finished products: Customs Duty on import of finished products should be prescribed at a very low level while nil customs duty to be specified for the import of raw materials / parts / sub-assemblies required for ultimate local manufacturing of instruments / devices and consumables. Currently the rate of customs duty on most of the spare parts of medical equipment is higher than the duty rate on equipment. While the basic duty rate on equipment is 7.5 percent, the basic rate of duty on spare parts is 10 percent. The compounded duty rate difference is almost above 10 percent. Since spare parts are used to run the equipment it should be treated like equipment only. The exemption may also be extended to parts, accessories, consumables or assembly components, whether required for manufacturing or to be assembled at site of use.
Customs duty on blood glucose monitoring strips should be exempted: Customs duty on blood glucose monitoring strips is 18.94 percent for Lancet and control solutions it is 25 percent. Customs duty for strips should be made duty free to encourage self-testing of blood glucose at affordable cost & to improve quality of diabetic patient’s life. Customs duty on medical sterilizers, biological indicators and bio patch should be reduced. Customs duty on these advanced sterilization products should be reduced to minimum slabs to improve quality of medical treatment & patient safety.
Customs duty on neurosurgery medical devices should be exempted: Customs duty is 18.94 percent on medical devices used in neurosurgery. Medical devices used in neurosurgery should be exempted from customs duty considering that these products are used for treating critical deformities & in lifesaving procedures.
Rationalise inverted duty on phaco emulsification equipment: Basic import duty on phaco emulsification equipment and accessories used in cataract surgeries is 7.5 percent and CVD is 6 percent, total duty works out to 18.94 percent. However, spare parts for this equipment are with basic duty of 10 percent and CVD of 12.5 percent the total duty works out to 29.44 percent. There is a differential of almost 10 percent in duty between equipment and spare parts of the same equipment. This anomaly needs to be removed. It is recommended to reduce the import duty for import of spares of phaco emulsification equipment to appropriate minimum rate.

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Dr Rajeev Boudhankar is the CEO of Bhatia Hospital