Revive, reinvent, revolutionise: Budget 2025 must supercharge healthcare with infra incentives, duty cuts, say experts

The Union Budget 2025-26 should offer an Infrastructure Linked Incentive Scheme similar to the Production Linked Incentive (PLI) scheme offered to other sectors and reduce duties on imported diagnostic equipment and input costs, says healthcare experts.

The budget should introduce an Infrastructure Linked Incentive similar to the Production Linked Incentive (PLI) scheme offered to other sectors, suggests Suneeta Reddy, Managing Director of India’s leading private hospital chain Apollo Hospitals. The government can also consider an Incentive of 50% on the cost of Capex incurred for the infrastructure creation of any new hospital over 100 beds as an additional investment allowance to be set off against the company’s tax payable. ‘’This can significantly facilitate faster capacity creation in the industry which will bode well for the patients and the population at large’’, she says.  

Rationalising the duty structure on imported medical equipment can lower cancer and other disease treatment costs in the country. ‘’Budget 2024 emphasised cancer treatment with reduced customs duties on essential medicines. This initiative should be extended to include targeted therapy drugs as well as advanced cancer treatment equipment like Radiotherapy machines and Robotics most of which have 37% in customs duties and are primarily technologies offered by global med-tech companies’’, she says.

The Government should also consider lowering the input GST applicable for hospitals to 5% for some of the key input services like lease rentals and allied charges, housekeeping, security and maintenance, transportation and manpower services, similar to the prevailing benefits in the education sector. While input costs to hospitals currently have full GST, healthcare services delivered by hospitals are covered in the GST negative list, resulting in input cost escalation to the extent of almost 8-10%, suggests Suneeta Reddy.

Increasing public healthcare spending to at least 2.5% of GDP is crucial for strengthening our infrastructure and ensuring universal coverage, says Dr. Ashutosh Raghuvanshi, MD and CEO, Fortis Healthcare. ‘’The government should reduce customs duties on essential medical equipment and consumables to lower healthcare costs significantly. Further, providing IT rebates and tax holidays will allow healthcare providers to reinvest in critical infrastructure and technology, ultimately improving patient care’’, he says.

Ameera Shah, Promoter and Executive Chairperson, Metropolis Healthcare says to enhance the quality and credibility of diagnostic services nationwide, the government should implement a robust policy framework that standardises practices and mandates NABL accreditation for every laboratory operating in India. ‘’Introduction of 0% GST on diagnostic services and refunds for GST paid on inputs. Additionally, increasing incentives for research and development in diagnostic technology will foster innovation and position India as a global leader’’, she says.

Another suggestion is raising the tax exemption for preventive health check-ups from the current ₹5,000 to ₹10,000, extending this benefit to multiple family members, and incorporating reimbursements for outpatient diagnostic services within insurance packages. Simplifying regulatory processes and introducing a single-window clearance system will also improve the sector's business environment, says Ameera Shah. 

The Union Budget 2025-2026 should prioritise innovation, ease of doing business, and policies that strengthen the Life Sciences Ecosystem, says Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance.