Boosting India's Medical Devices Sector: Key Recommendations from SBI
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Synopsis
A recent SBI report emphasizes the importance of extending the PLI scheme and establishing a uniform GST rate to invigorate India's medical devices market ahead of the Union Budget 2025. It outlines necessary reforms to enhance healthcare quality and reduce out-of-pocket expenses for patients.
Key Takeaways
- Importance of extending the PLI scheme
- Need for a uniform GST rate for medical devices
- Projected growth of the medical devices market at 12-15% CAGR
- Challenges posed by current GST rates
- Call for increased healthcare spending to 5% of GDP
New Delhi, Jan 25 (NationPress) Extending the Production Linked Incentive (PLI) scheme and establishing a uniform GST rate are vital strategies to enhance the medical devices market in India, according to a report from the State Bank of India (SBI) in anticipation of the Union Budget 2025.
The report outlines various reforms to improve India's healthcare, insurance, and taxation systems. It emphasizes the need for ongoing support in diagnostic services to manage the significant out-of-pocket expenditure (OOPE) faced by patients.
“Ensuring continuity in the availability of a minimum set of diagnostics suitable for the level of care is essential for enhancing overall healthcare quality and patient satisfaction,” the report stated, highlighting the necessity to mitigate the high OOPE associated with diagnostics.
In FY24, India's domestic medical devices market was estimated at approximately Rs 75,000 crore.
The report anticipates that the medical devices sector will grow at a CAGR of 12-15 percent over the next five years.
“By extending the PLI scheme, manufacturers can increase production, decrease import dependency, and support the country’s ‘Make in India’ initiative,” the report highlighted.
Additionally, it called for tax incentives to promote research and development as well as value-added activities within Global Capability Centres (GCCs). This could stimulate innovation and create job opportunities.
The report advocates for a standardized GST rate of 5 percent/12 percent on medical devices, contrasting with the current GST rates that range from 5 percent to 18 percent.
“This discrepancy complicates compliance for manufacturers and distributors. A unified tax structure could streamline adherence, enhance operational efficiency, and reduce costs within the industry,” the report stated.
The National Health Policy 2017 aims to increase healthcare spending to 2.5 percent of GDP by 2025 (up from 1.27 percent in FY16 and 1.95 percent in FY24).
However, the report proposes a more ambitious target of 5 percent to meet the growing demands of India's aging and expanding population.
Furthermore, the report urged the government to allocate revenues from the healthcare cess, recommending a 35 percent GST rate on tobacco and sugary products. This could bolster public health initiatives and help combat increasing non-communicable diseases (NCDs) such as diabetes, hypertension, obesity, and cancers in the nation.
