Budget 2025: Finance Minister Nirmala Sitharaman is all set to announce Budget 2025 on February 1 2025. Ahead of the Budget 2025, leaders from hospital sector are anticipating announcement of various critical schemes for the healthcare industry.
“The Union Budget 2025 must build on last year’s momentum to address the growing incidence of NCDs. Budget 2024 emphasized on cancer treatment with reduced customs duties on essential medicines. This initiative should be extended to include targeted therapy drugs as well as advanced cancer treatment equipment like Radiotherapy machines and Robotics most of which have ~37% in customs duties and are primarily technologies offered by Global medtech companies. Rationalizing the duty structure on these will help lower cancer treatment costs in the country,” Dr. Suneeta Reddy, Managing Director, Apollo Hospitals said.
Dr. Reddy also maintained that while input costs to hospitals suffer full GST, healthcare services delivered by hospitals are covered in the GST negative list, resulting in input cost escalation to the extent of almost 8-10 percent.
“The Government should consider lowering the input GST applicable for hospitals to 5% for some of the key input services like lease rentals and allied charges, housekeeping, security and maintenance, transportation and manpower services, similar to the prevailing benefits in the education sector. Further given the huge supply constraints on the number of beds that India needs in order to supports its population needs, an Infrastructure Linked Incentive similar to PLI should be considered, wherein the government can consider an Incentive of 50 percent on the cost of Capex incurred for infrastructure creation of any new hospital over 100 beds as an additional Investment allowance to be set off against the company’s tax payable. This can significantly facilitate faster capacity creation in the industry which will bode well for the patients and the population at large,” She explained.
She also emphasised that the GST on health insurance premiums needs to be again lowered across the board to 5% to foster greater insurance penetration. Mandatory health insurance coverage could be implemented for companies that employ over 20 employees .
“The Budget must also prioritize initiatives to boost telehealth and digital medicine to expand healthcare access and dedicate resources to preventive care, which would reduce the strain on hospitals. These measures will help pave the way for a robust and equitable healthcare system, ensuring better health for all,” she added.
Meanwhile, Gautam Khanna, CEO, P.D. Hinduja Hospital & Medical Research Centre, Mumbai said that the government has shown tremendous support and impetus towards the healthcare sector in the last few years.
“As the government sets its eyes on the next budget, we look forward to the possibility of an increased allocation to the tune of 2.5-3% for the healthcare sector. This would help in addressing the country’s growing healthcare needs and improve access to quality care. It will boost infrastructure development, especially in Tier 2 and 3 cities, strengthen primary care through expanded Public Health Centres, encourage public-private partnerships, and support medical education expansion to address shortages of medical professionals and nurses. The budget should also address the acute shortage of healthcare professionals through increased funding for medical education infrastructure and skill development programs,” Khanna said.
Additionally, the budget’s strategic focus should extend to creating sustainable healthcare solutions. For meaningful impact, we expect comprehensive reforms in health insurance accessibility, with the Ayushman Bharat scheme expanding beyond its current 34.2 crore beneficiaries through innovative financing models and higher amounts for complex procedures in super-speciality hospitals, he said.
“Tax incentives for private insurance adoption, particularly targeting the middle class, coupled with streamlined digital claim processes, could revolutionize healthcare financing. Substantial allocations for preventive healthcare, including a nationwide network of screening centres and wellness programs that could fundamentally shift our healthcare approach from curative to preventive will be beneficial for all,” he maintained.
Long-term Infrastructure like financing options at lower rates and higher payment periods along with tax breaks will help expansion and give access to the Indian population. Long-term infrastructure like financing options at lower rates and longer repayment periods, along with tax breaks, is critical for healthcare expansion and accessibility in India.
According to Khanna, affordable credit reduces financial strain on providers, enabling investments in facilities, equipment, and training. Current loan tenures of 7-8 years are insufficient, as hospitals require significant capital for land, infrastructure, operations, and human resources, with years needed to achieve breakeven.
“Long-term credit (15-20 years) with lower interest rates and reduced collateral requirements is essential to address bottlenecks, revive stalled projects, and reduce NPAs in the sector. Tax reforms are equally crucial. Shifting hospitals from the GST exemption category to zero-tax would allow input credit, lowering treatment costs for patients. Additionally, tax holidays for greenfield healthcare projects, akin to those for SEZs and Tech Parks, would drive private investments. A holistic approach, including incentives for ancillary services, is vital to create a robust ecosystem. Rationalized policies and support will transform healthcare, ensuring affordable and accessible quality care nationwide,” he said.
Digital health transformation should receive significant attention, with expected investments in AI-driven diagnostics, telemedicine infrastructure, and electronic health records, he informed.
“These technological interventions are crucial for bridging the urban-rural healthcare divide and optimizing our limited healthcare resources. Following the positive impact of previous customs duty exemptions on cancer medicines, we anticipate similar relief measures for a broader range of critical medical equipment and pharmaceuticals, stimulating both healthcare accessibility and domestic manufacturing capabilities. The budget may also consider moderate investments in the AYUSH sector, focusing on research-backed integration with modern medicine where appropriate, while maintaining the primacy of evidence-based healthcare practices. However, the success of these ambitious initiatives will hinge on robust implementation frameworks and governance mechanisms,” he said.