(MENAFN- IANS) New Delhi, Jan 25 (IANS) Extending the Production Linked Incentive (PLI) scheme and charting a uniform GST rate can be crucial to help boost the medical devices market in India, said a report from the State bank of India (SBI), ahead of the Union Budget 2025.
In the report, SBI proposed a series of reforms aimed at enhancing India's healthcare, insurance, and taxation landscape. It noted that although diagnostic services in the country have been upscaled up ensuring continuity is important and chartered measures to reduce the high out-of-pocket expenditure (OOPE).
“Ensuring continuity in the availability of a minimum set of diagnostics appropriate to the level of care is imperative for improving the overall quality of healthcare and patient experience,” said the report noting that this is important to cut down the high OOPE incurred by patients on diagnostics.
In FY24, India's domestic medical devices market was valued at around Rs 75,000 crore.
The report projected that the medical devices segment is expected to grow at a CAGR of 12-15 per cent over the next five years.
“Extending the PLI scheme would allow manufacturers to scale up production, reduce reliance on imports, and contribute to the country's 'Make in India' initiative,” said the report.
It also urged tax incentives to enhance research and development and for value-added activities in Global Capability Centres (GCCs). This could foster innovation and generate employment.
Further, the report proposed a uniform GST rate of 5 per cent/12 per cent on medical devices. Currently, GST rates range from 5 per cent to 18 per cent.
“This is creating complications for manufacturers and distributors. A uniform tax structure could simplify compliance, improve operational efficiency, and lower costs in the sector,” said the report.
The National Health Policy 2017 has set a target of increasing healthcare spending to 2.5 per cent of GDP in 2025 (1.27 per cent in FY16, 1.95 per cent in FY24).
However, the report called for“a more aggressive target of 5 per cent”. It could help address the growing needs of India's ageing and expanding population, it said.
Urging the government to allocate proceeds from the healthcare cess, the report proposed a 35 per cent GST slab on tobacco and sugar products. This can help strengthen public health programme as well as curb the rising non-communicable diseases (NCDs) like diabetes, hypertension, obesity, and cancers in the country.
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