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Key Budget 2022 expectations from healthcare and pharmaceuticals sector

Fiscal incentives, enhanced innovation and public-private partnerships- Budget 2022 expectations from healthcare and pharmaceuticals sector


The COVID-19 pandemic has tested the resilience of our healthcare system. More needs to be done, starting with an increase in public healthcare expenditure, which should be in line with other countries, in the range of 8% of the gross domestic product (GDP). To gauge the market sentiments and better understand the expectations from Union Budget 2022, Grant Thornton Bharat conducted a pre-budget expectations survey for the healthcare and pharma sector.

Commenting on the survey results, Bhanu Prakash Kalmath S J, Partner and Sector Leader – Pharma & Healthcare, Grant Thornton Bharat, said, “Availability, accessibility and affordability have been the focus of the government and an increase in healthcare budget allocation to at least 3% of the GDP over the next few years will provide the desired impetus. Measures, such as enhancing deductions under Chapter VI-A of the Income Tax Act, 1961 and zero-rated GST structure for healthcare services would bring down the cost of healthcare services and will provide some relief to the citizens.”

According to the survey results, a mix of fiscal incentives and public-private partnerships will encourage private investments in the healthcare area. Permitting expenditure towards healthcare infrastructure as a corporate social responsibility (CSR) expenditure will provide an impetus to investments in rural areas. Zero-rated Goods and Services Tax (GST) structure for healthcare services has emerged as a key demand, with nearly 78% of respondents favouring such a regime.

With regard to the pharmaceuticals sector, India Inc expects that innovation and research & development (R&D) will be the key investment drivers. Restoration of higher percentage of deduction under Section 35(2AB) of the Income-tax Act, 1961 will encourage R&D and innovation. Inclusion of certain pharmaceutical products under the  Remission of Duties and Taxes on Export Products (RoDTEP) scheme, amendment of regulations around deductibility of free samples given to doctors and a lower Good and Services Tax (GST) rate on clinical trials and research activities will be a welcome move.

Commenting on the same, Bhanu added, “India’s pharmaceutical industry has played a key role in the global fight against the pandemic. Enhanced outlay under the PLI schemes and encouraging exports and research and development will further advance the ‘Make in India’ vision and consolidate our position as a leading pharmaceutical supplier.”