India’s healthcare sector is one of the largest sectors in terms of revenue and employment. The hospital sector in India is growing at a CAGR of 18.24 per cent, and the diagnostics industry in India is currently valued at $4 Bn. Moreover, on the global scale, India is the 4th largest MedTech market in Asia and among the top 20 globally. The statistics underline how vital India’s healthcare market is—locally and globally. As we accelerate the pace towards ‘Make in India’, prioritising localisation and reducing import dependencies, this budget is significant for what it brings to the healthcare sector.
The Union Budget 2024-25 builds a strategic roadmap for the healthcare sector with a special focus on nine key budgetary priorities toward a ‘Viksit Bharat’. With India closer to its 2025 deadline of raising the health expenditure to 2.5 per cent of GDP, this budget will not only define 2025, but also underlines the healthcare promise of a Viksit Bharat 2047 to its citizens.
Zooming in on the healthcare sector, the 12.97 per cent increase in health expenditure to ₹90,958.63 crore focuses on universal healthcare for all, which would entail an expansion of healthcare infrastructure, especially in Tier 2 and 3 cities/towns and rural areas. However, more is needed to ensure that the healthcare market thrives and the Sunrise Sector delivers to its full potential.
Make in India from Manufacturing Lens
The government’s commitment to the ‘Make in India’ initiative is evident from the substantial hike of 40.9 per cent in the PLI allocation for the MedTech sector. The move is expected to incentivise local manufacturing, reduce import dependence, and build resilient supply chains. However, we need more to make ‘Make in India’ work.
For instance, localisation will be strengthened by prioritising sourcing homegrown medical technology products. As things stand, 80 per cent of procurement in the sector is by private entities.
Providing rebates to healthcare facilities built in non-metro/rural areas for purchasing MedTech products, particularly in underserved areas, and lower rebates for imported medical devices of similar specifications will strengthen the domestic market. Attractive incentives will encourage more players to invest in the market.
From the Lens of Innovation
The government has also raised the funding for biotechnology research and development from ₹500 crore to ₹1,100 crore. The move underlines the government’s commitment to innovation. If we want to make healthcare accessible for India’s 1.4 Bn, we must invest in futuristic innovations to enable access and quality care. We must look at ways to integrate technological innovations that enable access while lowering the cost of healthcare.
If we could boost investment in local R&D through Innovation Linked Incentive schemes on the lines of Production Linked Incentives, it would benefit the sector. The ₹1 lakh-crore corpus for R&D in the interim budget will enable strategic investments in innovation and research. Moreover, with ‘Promotion of Research and Innovation in Pharma MedTech’ (PRIP), India’s will shift from cost-based to innovation-based manufacturing.
India— for India and the World
As India aims to become the world’s manufacturing and innovation hub, we must look closely at a regulatory environment that promises innovation and global competitiveness. Speaking of India’s Sunrise Sector, our MedTech prowess needs to be at par with the global standards for India to be a potential hub for medical devices. This requires creating a regulatory policy ecosystem harmonised with international standards while removing a multi-layered/multiplicity of regulations. This will also encourage the Ease of Doing business with the world’s fastest-growing economy.
Additionally, the budget also announced, “Prime Minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over a 5-year period with a central outlay of ₹2 lakh crore.” The schemes will further propel the journey of Make in India with industry-ready skilled force aiding both— the innovation and manufacturing sectors of healthcare.
India’s healthcare sector, especially as we envision Viksit Bharat, will be future-ready as the country plans to invest more in skilling, R&D, manufacturing and building a strong foundation at home and a global footprint. Prioritising accessibility, affordability, quality care, and domestic manufacturing will transform India’s healthcare system into a robust, inclusive, and globally competitive force, aligning with the nation’s aspiration of a healthier and prosperous future by 2047.
The author is Member, FICCI Medical Devices Committee
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