Towards a healthier, more equitable and innovative Indian healthcare sector

In the past few years, the Indian government has strengthened its focus and allocation to healthcare. The Union Health Ministry received an allocation of about Rs 90,650 crores in the recent budget of 2024-25, a 12.5 per cent increase over 2023-24. Specific highlights of the budget for the sector include an increase in outlay for research and development and for the Ayushman BharatPradhan Mantri Jan Arogya Yojana (PM-JAY), the government’s universal health coverage scheme, which saw a 10 per cent budget increase to Rs 7,300 crores. Other announcements include benefits for cancer patients and changes in custom duty for components of X-ray machines to encourage local manufacturing and competitiveness. 

There is more to be done to address the sector’s urgent needs and reshape India’s healthcare and pharma landscape.

Strengthen health infrastructure and reach 

Currently, India’s health expenditure stands at 2.1 per cent of GDP and it has to increase to at least 2.5 to 3 per cent of GDP. Higher expenditure would be pivotal to strengthening healthcare infrastructure, particularly in rural and underserved areas, and fulfilling the increasing demand on healthcare resources in the country amidst an ageing population, increasing disease burden and a growing incidence of NCDs and lifestyle diseases.

The increased funding for Ayushman Bharat is a definite step towards moving closer to universal health coverage, and such coverage should include modern treatments such as TAVI/ TAVR involving valve implantation or replacement. Focus also needs to be laid on strengthening the insurance systems to improve the reimbursement mechanisms and deepen the involvement of the private health sector. Going forward, policies promoting MedTech innovation, R&D incentives, and digital health infrastructure development will be crucial for improving patient care and operational efficiency, especially in fulfilling requirements in rural areas.

The pharma sector has been an important focus point in recent years, with several targeted initiatives to strengthen the domestic manufacturing landscape and make India self-reliant. The increase in R&D outlay is a welcome step. A continued thrust towards streamlining production linked incentive (PLI) schemes, incentivising indigenous R&D in advanced manufacturing technologies, and novel chemical entity (NCE) research are needed to further grow the sector. Establishing Centers of Excellence and leveraging artificial intelligence for pharma research can advance India’s capabilities in NCEs, biologics, and biosimilars, placing it at the forefront of global pharma innovation.

Enable global competitiveness 

The MedTech sector aspires to reduce import dependence and become globally competitive. There needs to be a phased reduction of customs duties, improving export incentives under schemes like Remission of Duties and Taxes on Exported Products (RoDTEP) and strengthening the Production Linked Incentive (PLI) to foster local manufacturing and innovation. Reducing import duties and lowering GST on locally procured raw materials for critical medical devices can make treatments more affordable and encourage local manufacturing and innovation. Additionally, regulatory frameworks that facilitate innovation while ensuring patient safety are essential, emphasising streamlined approval processes for MedTech startups.

Enhance accessibility, affordability and preventive care 

On the hospital front, there is a pressing need to alleviate the urban-rural divide in healthcare accessibility and affordability. Bridging this disparity would require a multi-pronged strategy of infrastructure development, workforce enhancement, and leveraging digital technologies effectively. Enhanced funding for rural healthcare infrastructure and encouraging public-private partnership models in healthcare delivery could be a positive step in the right direction. Additionally, manpower shortage would have to be addressed by developing focused training programs to enhance the skillset of the existing workforce and establishing more medical and nursing colleges to bridge the manpower gap. 

The growing incidence of non-communicable diseases (NCDs) also calls for measures to promote the adoption of preventive health screenings and the adoption of alternative healthcare services dedicated to preventive care and the management or reversal of chronic conditions like diabetes. Increased funding for infrastructure and accessibility in preventive healthcare is required along with fiscal incentives to promote the adoption of preventive health checkups and genetic testing. Genomics plays a crucial role in disease management and treatment, necessitating public awareness, government support, and robust regulation. Also required is a reduction in GST to stimulate consumer spending in diagnostic services, making these essential services more affordable and widespread. 

The alternative healthcare sector is primarily catered to by startups developing apps integrating health with technology. A reduction of 18 per cent GST on such services can promote the adoption of such integrative health technologies. The startup sector also seeks privileges such as property tax exemptions, better access to debt funding, etc. to foster innovation in the sector. 

In conclusion, there are multifaceted needs in India’s healthcare and pharma sectors, and a conducive environment is required to enable their growth. With strategic investments and policy reforms, the government can pave the way for a healthier, more equitable future. This comprehensive approach will not only enhance the nation’s healthcare infrastructure but also foster innovation, making India a global leader in medical research, diagnostics, and treatment.