The Union Budget 2024, announced on July 23, 2024, by Finance Minister Nirmala Sitharaman, included various provisions for the healthcare industry in India. Some of the notable measures announced were customs duty exemptions on three cancer treatment drugs, which are Durvalumab, Trastuzumab, Osimertinib, and Deruxtecan. Furthermore, the government announced that the total outlay for the health sector is Rs 89,287 crore, amounting to 1.85% of the budget expenditure, which is an increase from the Rs 79,221 crore allotted in the Union Budget 2023.
Chaitanya Sarawate, Managing Director, Wipro GE Healthcare and President and CEO, GE HealthCare South Asia, in his analysis of the Union Budget 2024 said: “When we speak about the healthcare sector, the focus on affordable cancer care took centerstage as Finance Minister outlined nine key budget pillars of priorities for ‘Viksit Bharat’. That said, the budget offers more promises with a triangular zone of progress – access, affordability, quality healthcare.”
He went on to add that the increase in healthcare expenditure would enhance access to economical yet great healthcare for the needful in rural areas. “The increased health expenditure by 12.97% to Rs 90,958.63 Crore from last year is expected to expand healthcare infrastructure in Tier 2 and 3 cities, towns and rural areas to provide access to affordable and quality healthcare.”
In an effort to reduce import dependence and build resilience in supply chains, the budget has introduced a complete customs duty exemption on 25 critical minerals. Chaitanya Sarawate, said that this was a welcome move. “Moreover, with the operationalization of Anusandhan National Research Fund for basic research and prototype development and private sector-driven research and innovation at commercial scale with a financing pool of Rs 1 lakh crore, we will witness a spur in R&D. It would help India to move from volume to value manufacturing,” he said.
The budget has allocated Rs 85 crore for Production Linked Incentives (PLI) in the MedTech sector, marking a 40.9% increase from last year. “To incentivize manufacturing in MedTech sector the 40.9% increase from last year to Rs 85 Crore in this budget for Production Linked Incentives is encouraging, especially as ‘Make in India’ gains momentum. Simplification and streamlining of the scheme for easy adoption by industry and expanding it to brownfield investments and components and subcomponents is the need,” said Sarawate.
Sarawate also applauded all the steps taken in the direction of encouraging investments and reducing trade barriers. “The announcement of “comprehensive review of the rate structure for ease of trade, removal of duty inversion and reduction of disputes” will encourage more investment in the country and propel the Atmanirbhar journey. Our suggestion is to segregate HSN codes for differential custom duties between finished good, components & raw material by tweaking HSN Code mapping (e.g. leveraging last 2 digits of HSN code to differentiate). Further the IGCRD benefits of 2.75% should be widely popularized for higher adoption and benefits to domestic industry,” he noted.
The Union Finance Minister has also adjusted the customs duty rates on X-ray tubes and flat panel detectors. These changes are anticipated to benefit the X-ray machine industry by improving component availability at reduced costs. “It’s heartening to see the industry recommendation being heeded by the government by way of providing exemptions of custom duties on specialized raw materials and reduction of custom duty from 15% to 5% brought inadvertently on X-ray tubes and flat panels detectors. These steps can further be bolstered by constructive dialogues with the industry conversations to evaluate the local manufacturing capabilities as done during Meditech Stackathon by Department of Pharmaceuticals,” commented Sarawate on the move.
He further added: “The major thrust for incentivizing skilling and job creation by providing cash in hand to youth and encouraging MSME and large industries to use their CSR funds to train and employ, is promising. Buoyed by progressive policy reforms, we are hopeful that the new budget will pave a new way for the healthcare sector, especially as we chart the course powered by Make in India MedTech.”