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The Indian healthcare sector and budget 2003-04

NEW DELHI: Following is the full text of Indian Finance Minister Jaswant Singh's address to Parliament while presenting the federal budget for fiscal 2003-04:


24. With three principal objectives in mind: to contribute to enhanced national health; to promote India as a global health destination; and to enable easier access to health facilities to our disadvantaged citizens, a number of additional measures are now proposed.

25. In order to encourage private hospitals to either establish new or to expand existing medical facilities, it is proposed to extend the benefit of Section 10(23 G) of IT Act to such financial institutions as provide long-term capital to private hospitals with 100 beds or more.

26. In view of the rapid strides made in R&D in medical equipment, there is recognisable need to frequently upgrade and replace the existing equipment with the more 'state of the art'. It is therefore, proposed to increase the rate of depreciation from the present 25 per cent to 40 per cent in respect of life saving medical equipment.

27. To assist citizens with impaired vision, the basic customs and excise duties on rough ophthalmic blanks shall be reduced from 25 to 5 per cent, and from 16 to 8 per cent, respectively. To help people give up their addiction to tobacco and its products, excise duty on Nicotin Polacrilex gum shall be reduced from 16 to 8 per cent.

28. It is also proposed to reduce the customs duty on specified life saving equipment from 25 per cent to 5 per cent, and also exempt them from CVD (additional duty of customs). In respect of life saving equipment already exempt from CVD, it is proposed to exempt them from excise duty as well, so as to encourage indigenous manufacturers.

29. A large number of life saving drugs are either exempt from customs duty or attract a nominal 5 per cent duty. It is proposed to extend the concessional duty rate of 5 per cent to some more drugs. Life saving drugs currently attracting nil or 5 per cent customs duty will also be exempt from excise duty. Basic customs duty on glucometers and glucometer strips used by diabetics, will be reduced from 10 per cent to 5 per cent; and they will be exempt from excise duty as well. Cyclosporine will be exempted from excise duty. This reduction of excise duty to nil, wherever imports are exempt from CVD, will certainly make our domestic industry more competitive, as also better enable them to face the new intellectual property right regime from 2005.

Health insurance

30. For a large majority of our less advantaged citizens, easy access to good health services is just not there. In order to correct this and offer health protection, of some choice, the public sector general insurance companies have been encouraged to design a community-based universal health insurance scheme during 2003-04. Under this scheme, a premium equivalent to Re.1 per day (or Rs.365 per year) for an individual, Rs.1.50 per day for a family of five, and Rs.2 per day for a family of seven, will entitle eligibility to get reimbursement of medical expenses up to Rs.30,000 towards hospitalisation, a cover for death due to accident for Rs.25,000, and compensation due to loss of earning at the rate of Rs.50 per day up to a maximum of 15 days. To make the scheme affordable to BPL families, the Government has decided to contribute Rs.100 per year towards their annual premium. Full details will be publicized shortly.

31. I request Hon'ble Members to give this scheme the widest possible coverage in their constituencies. The benefits Sir, are real. 32. In the first phase, at least an additional 50 lakh BPL families will be covered during 2003-04.

Disabled and handicapped

33. The Government is committed to providing equal opportunities, protection of rights, and all-round development of persons with disabilities. A number of initiatives have already been taken in this regard.

34. Now, for income tax purposes, it is proposed that the physically handicapped or persons with such dependents be entitled to a deduction for permanent physical disability of Rs.50,000, and an enhanced deduction of Rs.75,000 in case of severe disability.

35. I also propose to reduce the customs duty on hearing aids, crutches, wheel chairs, walking frames, tricycles, braillers and artificial limbs to 5 per cent without Special Additional Duty (SAD). They will be exempt from CVD, and the domestic manufacturers will also be exempt from excise duty. I also propose to reduce the customs duty on parts of hearing aids and wheel chairs to 5 per cent without CVD and SAD.

36. The Government will establish a college of rehabilitation sciences at Gwalior, and a national institute for empowerment of persons with multiple disabilities at Chennai.

Research and development

92. Hon'ble members, as I have already said, knowledge is industry; and this is particularly so when our imperative is to be the best, in all aspects in general, but particularly in product design and quality. To encourage R&D, it is proposed to extend the tax holiday to R&D companies established up to March 31, 2004.


101. All the benefits listed under health-care will also promote pharmaceutical industry. Besides, income tax concessions to pharmaceuticals, bio-technology and information technology are at par. All drugs and materials imported or produced domestically for clinical trials will be exempt from customs and excise duties. Customs duty on import of Reference Standards by the industry has been reduced from 25 per cent to 5 per cent.


107. Biotech is our today's sunrise, tomorrow's showpiece industry. The Government, to facilitate units engaged in R&D in biotechnology and the pharmaceuticals sector, has decided to remove the existing restriction of minimum export obligation of Rs.20 crore for availing exemption from customs duty for specified equipments. Further, the restriction of full exemption being limited to only 1 per cent of last year's export turnover is also lifted for R&D units. Moreover, in respect of R&D units with manufacturing facilities, the benefit of full customs duty exemption for specified equipment will also be available for their manufacturing activity to the extent of 25 per cent of the previous year's export turnover.

Promoting India: India Development Initiative

117. An initiative to promote India as both a production centre and an investment destination, called 'India Development Initiative', shall be established in the Ministry of Finance, with an allocation of Rs.200 crore for 2003-04. This initiative will also leverage and promote our strategic economic interests abroad.

(Ref: The Economic Times, March 02, 2003)



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