The central government’s Ayushman Bharat programme that plans to provide health cover of upto Rs 5 lakh to 500 million people every year opens up several opportunities for corporate players in the healthcare space.

Sunil Kant Munjal, chairman of Hero Enterprise, which has interests in insurance distribution, steel-making, real estate, and corporate training, believes that the Indian healthcare system will not just cater to its own people but also people from other parts of the world.

Munjal was also one of the front-runners in the bidding war for India’s second largest hospital chain Fortis Healthcare Ltd in a joint bid with Anand C. Burman, chairman, Dabur India. The June 2018 cover story of Fortune India talks in depth about this transaction.

Calling it a “deliberate and thought-through decision” to walk away from the Fortis buyout, Munjal says the group is not looking at any acquisitions in healthcare right now.

The business promoter and industry veteran spoke to Fortune India about the macroeconomic headwinds, current challenges, and robust opportunities in the healthcare segment of the country on the sidelines of Mindmine Conversation, an influential ideas exchange platform organised by the Mindmine Institute, an independent think tank set up by Hero Enterprise in Mumbai. Edited excerpts from the interview:

We have maintained a healthy growth this year. What are you predicting for the next year?

In an election year, it is complex and difficult to predict. We would probably grow a little better next year as compared to this year. We have already built the momentum for economic growth, we will be somewhere around a 7.5–7.6% growth next year, which by world standards would be phenomenal. Except large economies like the US, most others are still challenged. Within Europe, you are still seeing some interesting turnarounds right now. UK, with the massive uncertainty about their separation from the EU, has raised many question marks. Even though we have an election next year, we are better positioned than many of our global counterparts with certainty on our broad economic policy.

Indian economy is positioned in a manner that it will continue to be among the fastest growing economies in the world over the next 10-12 years. Our trend lines are clear now. We have put the building blocks for the future in place--improved taxation systems, bankruptcy code or higher allocations to states, improved allocation to education and healthcare, focus on the rural economy--and positioned ourselves uniquely in the world. Over the last 20 years, we have increasingly become a very external economy. We are linked to the world whether we like it or not--which is both an opportunity and a challenge. Challenge is that you get impacted by what’s going on in the global world. On the flipside, the world economy is much bigger than ours. So, the opportunity available to us for growth is fantastic.

What are the challenges?

Our biggest strength is our people and that is also our big challenge. Demographic dividend is a double-edged sword. If we have the ability to train and educate them, it has the ability to trigger economic opportunities. It is an amazing strength. However, if you can’t do that, then people will get angry and upset because you will raise the expectations and if they are educated, their expectations are higher. If you’re not educated, the expectations are different. So, the challenge ahead of us is going to be implementation with a high degree of efficiency of the many different initiatives that we have already launched and creating big multipliers.

What is the impact of elections on corporate India?

If any policy change takes place, and the government starts putting money into areas which were not directly impacting the economy in a positive way, you then tend to lose consumption in some areas. Because of GST, we have seen a massive amount of streamlining take place. In all these 70 years, we had approximately 64 lakh units registered for indirect taxes. Now, it has gone up by 37 lakh units in one year. We are going to see the impact of that now. Election year or not, this momentum that’s moving us forward will keep us going.

We are looking at tough times with the trade war between the U.S. and China coupled with the growing trade restrictiveness around the world. Should Indian companies be worried?

Of course, it will have an impact. We are an external economy, connected to the world. We need to be concerned but not overly worried. It also opens opportunities for countries like India specifically. As American companies and businesses get upset with China, they have to look at other places. We are very well positioned. We need to do the right things to demonstrate our capabilities to service the needs both of goods and services and reach out and make the offers there. There is more for us to gain in this, than to lose. We have an industrial base already. China was known to produce goods at lowest prices in the world. Lot of those goods from China were manufactured goods that were going to the U.S. Once they put high tariffs, some of them may suffer. Indian companies need to scramble and figure out a way to get to those places. For instance, Bangladesh has become a big player for textiles. Some of the businesses that they are taking are businesses from China. We have similar opportunities.

Do you see the NPAs problem on its way to resolution?

I don’t see NPAs (non-performing assets) reaching their end yet. I am not overly worried about some of the cases that are taking place. In some ways, it was necessary to get all parts of the regulation to get established so that you know in future what will work and what will not.

What are the possible implications of differences between RBI and finance ministry?

The issue between RBI and finance ministry is neither new nor are we the only case in the world. The very mandates of both these are very different. Their alignment is helpful but cannot have an identical view that will be worrisome if they thought same on everything. But, should it be so public? I think, that’s a question that we need to ask ourselves. Does it demoralise any part of the system, does it create any fear in terms of fear and rating overseas? I think to some extent it does. I am hoping that they will figure out a way to resolve it.

You pulled out of the Fortis buyout talks. Are you looking for similar acquisition opportunities in the healthcare and hospital space?

It was a deliberate and thought-through decision to walk out of that transaction. At this moment, we are not looking at [anything]. There are hardly any sizeable assets in healthcare which have both quality and scale. We like scale. Quality is something we believe we can build even if that is not there.

Healthcare will grow in a manner where India will be able to address the healthcare needs for its own people and also be a destination for healthcare.

Healthcare opportunities are at three different levels in India. The government of India’s healthcare scheme to provide insurance to 500 million people presents immense opportunities. The government is not providing the healthcare. It is only providing an insurance cover for that healthcare. So, the physical capacity to deliver that healthcare obviously will have to be created. So, some of these will come to existing healthcare entities, but some of these will have to be new entities that will have to be created. At this moment, we do not have sufficient capacity to meet all of our needs.

There are three kinds of hospitals-- government hospitals, the charitable/ not-for-profit, and private for-profits. The private for-profit hospitals are considered the best in terms of quality. But they are also the most expensive. So, we have to figure out a way to bring quality at a price which a large section of our population can afford. There is an amazing opportunity out here for smart entities to come in and take up that space. It is not just hospitals but the entire spectrum of everything that goes into healthcare--use of technology, artificial intelligence, pharmaceutical distribution, and medical devices--that provides a massive opportunity for the corporates.

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