Healthcare Sector To Govt: Slash Those Custom Duties And Taxes

These policy changes will make healthcare more affordable for more people; on the eve of the Budget reading, healthcare experts gave us their expectations at the Businessworld-Zee News Budget 2017 Roundtable.

"Price rationalization of medical devices or any healthcare services should not be done at the expense of quality," commented Pavan Choudhary, director general and chairman of MTaI, right after budget reading by FM.

Reducing custom duties
Last time around according to Pavan Choudhary, director general and chairman of the Medical Technology Association India (MTaI), the government increased custom charges on most imported medical devices from 11.6 per cent to 18.9 per cent.

China reduced their custom charges on more than half of their imported medical devices. It's gone from 4 per cent to 3.3 per cent.

Sanjay Bhutani, managing director for India and SAARC for Bausch and Lomb, an MNC importing medical devices said, "To be sustainable, a company cannot but help increase the price of medical devices, when custom charges or dollar rates increase."

Choudhary continued, "Those custom charges have increased the price of an MRI machine by 70 lakhs. Some hospitals can't afford to pay that much more. So they continue to use the old machines - it's inaccurate, it's low quality healthcare services and can be hazardous to the operator."

The rising custom charges also pose black market risks with serious implication to the businesses of the entire medical industry. "When countries around you have import custom duties that are zero or near zero, what's stopping people from running smuggling rackets. My biggest budget expectation is that the centre proposes to reduce those custom charges and keep them on par with the rest of the world," finished Choudhary.

Switching To Made In India
It's either reduce the custom charges or start manufacturing medical devices right here in India.

Make in India is a good initiative according to Choudhary.

Bhutani of Bausch and Lomb rebutted, "But it's not simple to make in India. The country still lacks the support infrastructure, the ancillaries like robust design and engineering centers to make high quality devices critical to a patient's healthcare."

Choudhary of the MTaI predicts, "It will take another 3 to 5 years but the government should start preparing the path for substitute medical devices made here in India, so that the patient would not have to bear the brunt of ever increasing custom charges."

Attracting foreigners to make in India (we need 'em)

"And to set up these made in India manufacturing facilities we will need the expertise and money of foreigners. 70 per cent of the wealth and technology of the world comes from the west. We have 5 percent of the wealth and technology here and a much higher population. So we need help from west," said Choudhary.

He continued, "The medical device industry has a high gestation period. So the government will have to roll back some of the customs to attract those foreign medical device manufacturers and FDIs."

Gaurav Malhotra, managing director and CEO, Medicover Healthcare knows all about FDIs. He has helped rope in one of the highest FDIs from a Swiss fertility treatment company worth 650 crore; one of the highest during the era of Modi. He is hopeful the government will make investing and setting up facilities easier for foreign medical companies.

"It's took us 140 licenses and one year to get approval to set up in India. The number of inspections only intensifies as you go from Tier one to Tier two to Tier three. I would like the government to stop the inspector rage and increase ease of doing business; strictly monitor the industry by all means, but please reduce the number of inspections and procedures."

Usually all these charges will be transferred to the patient who pays a higher price without even realizing it according to Bhutani. "If hospitals can claim VAT like they are able to in Malaysia, then patient care in India will be much more affordable to a lot more people," he said.

Malhotra added, "And the government should consider not taxing preventive and curative healthcare expenses of a household. India's entire allocation for healthcare is 4.7 per cent of GDP and the government is only contributing 1.3 per cent of that. So the government claiming a tax greater than its contribution just does not make sense. Remove the tax on healthcare expenses, it will help ease the burden of a patient."