The healthcare sector has sought for India Infrastructure Finance Company Limited (IIFCL) funding for large-scale projects on a long-term debts basis. Besides, it has also mooted a healthcare upgrade and new investment fund or a health development fund with an initial Rs 10,000-crore corpus. This would help create better infrastructure facilities, the sector feels. The industry has also called for a priority sector status to unleash funding for hospital infrastructure development.
In a letter to finance minister Pranab Mukherjee, Apollo Hospitals group chairman Prathap C Reddy said India?s healthcare infrastructure is way below what is needed for adequate delivery of services. The overall healthcare infrastructure in India is very poor when compared with other developing countries, Reddy said in the letter. There exists a huge gap between healthcare infrastructure facilities available and their demand in the country. India has just 1.5 beds, 0.5 physicians and 0.9 nurses per 1,000 people. These figures are comparable to low-income countries and well below the standards of developing countries. There is an urgent need to add 8,00,000 beds by 2012 with an estimated capital outlay of $20 to $30 million a year for the next decade.
Currently, the sector contributes about 6.1% to the GDP of the country of which the government?s contribution is 1.1%. Given its potential for growth and employment generation, the healthcare sector will become one of the most powerful economic engines for the nation and would contribute to increase in GDP by 2-3%. The sector would provide direct employment opportunities for at least two million people. In order to catalyse quality infrastructure development, the government needs to enable and facilitate the environment by incentivising the healthcare sector, he feels.
Besides, the sector seeks a 10-year tax holiday (u/s 80 -1B) extension for new hospital projects and 7-year extension for hospitals that are upgrading facilities. Further, industry experts have called for relaxation of GST for the healthcare sector. Currently, healthcare services are not taxable under service tax regulations. The present status is likely to be maintained under the new GST regime. Also, supply of goods such as medicines, vaccines, surgical consumables should not be made liable for GST. Basic customs duty for medical equipment under the customs tariff heading should be brought down to 5%. The basic customs duty on inputs required for manufacturing equipment be reduced to 5% across the board, they feel.
On a similar note, Neuland Laboratories Limited CEO D Sucheth Rao says that the government should provide incentives and tax breaks to companies that are looking towards India for conducting and contracting research. The pharma sector requires tax exemptions and more incentives from the government to spur drug research in the country. ?The weighted tax deduction benefit for R&D should be extended to 2012 in order to make new companies eligible for tax holiday. Currently, the weighted deduction benefit for R&D is available till March 31, 2012, for all companies that were approved as scientific research organisations on or before March 31, 2007,?? he said.