The Indian healthcare sector and budget 2003-04

Re cognised as a knowledge-based industry with great export potential

Hospitals : Investments into healthcare sector should now go up substantially with the proposed extension of tax benefits to financial institutions, which provide capital to private hospitals with 100 beds or more.

Medical Equipments : Reduction in customs duty on specified life saving equipments from 25 percent to 5 percent and their exemption from CVD can bring down the cost of investing in technology in hospitals and other healthcare institutions. The revised rate of depreciation at 40 percent from 25 percent – a significant sop for healthcare sector.

Pharmaceutical Industry : The budget has given a definite boost to the research and development activity with a string of incentives

Clinical Trials : The government knows well that conducting clinical and pre-clinical trials is going to be a big business in India in the years to come. A good number of MNCs, CROs and some Indian companies are already into clinical trials in a big way. New incentives should attract many more R&D ventures into the country. Encouraging pharma industry to build a strong research and development base is extremely important to take it to the next phase of growth.

Health Insurance : Provisions on health insurance will make a difference to the quality of life, thereby promoting demand for the sector

Bulk drugs and other chemicals : But the decision to reduce the peak customs duty on bulk drugs and other chemicals to 25 percent from 30 percent is not in the overall interest of the domestic industry. Import requirement of bulk drugs has been on the increase for some years now with discontinuation of a large number of essential drugs by the domestic companies. A 5 percent cut in customs duty, at this stage, will make imports more attractive and can discourage existing bulk drug producers. Growing dependence on other countries for bulk actives could destabilize India's pharma industry in the long run.

( Abstracts from the full text of Indian Finance Minister Jaswant Singh's address to Parliament while presenting the federal budget for fiscal 2003-04 )