Budget 2022: What the medtech sector is looking for from the Finance Minister

By Ashok Patel

So the budget is just days away. Like all industries, the medical device sector too has its wish list out. At a time when the country is coming to terms with what may be called the third wave of the pandemic with omicron as the new variant testing our immunity as well as preparedness, there would be natural expectations and the apprehensions of the healthcare industry including the medical device sector around the upcoming budget. So what is the medtech sector really expecting from the budget 2022?

Wish for the budget to add to the financial strength of manufacturers

First of all, the medtech sector would expect the budget to strengthen the finances of the medical device manufacturers. While easy availability of finance at low cost of interest is one way, creating environment for investment into R&D by redesigning financial models is another way forward. In addition, the medtech sector would wish for more industry-friendly duty and tax policies from the budget which would also bolster the self-reliance drive of the government. Further, apart from expecting simplification of FDI norms, the industry would desire a reduction if not abolition of custom duties on raw materials used for medical equipment especially those used for critical care equipment. Simultaneously, the industry would expect the government to raise import duties on standalone and finished medical devices. There would also be expectations for preferential treatment in government procurement apart from capital gains exemption for startups and general reduction of GST on domestic devices and equipment including lab reagents and consumables. Incentivizing investment into manufacturing by allowing higher weightage to capital investment (200%) would also be on manufacturers’ wish lists.

Count on the budget to expand the ongoing PLI scheme to include the smaller players

Of course, in most opinions and views, the medtech sector would wish for the government to expand both the ambit and allocation vis-à-vis the hitherto announced and currently existing schemes such as the Performance Linked Incentive (PLI) schemes and special provisions formedical device parks. So far until the end of 2021, twenty-one companies in total have been approved under the PLI scheme with an aggregate investment commitment of nearly Rs 1060 crore. However, the high threshold criterion of achieving minimum incremental sales of Rs 60 crore in the first, 120 crore in the second and 180 crore in the third year is hugely deterring for small players. According to Association of Indian Medical Device Industry, 95% of its members are MSMEs. The budget needs to address this gap and afford smaller players greater policy space for participation. At the same time, the industry would also wish that the budget would include more medical device categories under the scheme.

Aspire for an increase in the number of beneficiary medical device parks

In a similar vein, the medtech industry would hope that the upcoming budget would increase the number of medical device parks which have been announced to be incentivized with a grant-in-aid of a maximum Rs 100 crore per park by the central government. Under this, common infrastructure including testing and laboratory facilities would be provided to four medical device parks proposed by state governments. However, going by the number of state governments making an attempt to garner the centre’s approval and attention, medical device makers would earnestly hope for the government to raise not just the number of parks to be benefitted but also the amount of money which has been earmarked per park.

Expect consumables and medical device accessories to be given due attention

Also, the medtech industry would expect in the budget to provide sufficient impetus to consumables and disposables as well as medical device accessories, segments which are brimming with promise.

Desire bolstering of IP protection

The medical device sector would also expect the budget to provide greater protection to their intellectual property rights by way of simplification of legal systems.

Hope for increased policy attention to infectious disease-related devices

In light of infectious diseases making frequent appearances often of epidemic scale, in the budget, the government must incentivize making of diagnostics and testing devices and equipment, vaccine-related storage and delivery equipment as well as those catering to preventive health needs. With omicron-led the so-called third wave being underway, adequate policy support must also be extended to Covid-related equipment and supplies including masks, PPE, oxymeters and thermometers, oxygen concentrators, ventilators etc.

Look for specific allocation for training of personnel

In the coming budget, the industry would also expect the government to provide sufficient funds for training and upskilling of personnel involved in running critical care and lifesaving devices and equipment such as ventilators. Importantly, it has been earlier reported in the media how ventilators were lying unused in many places merely because of shortage of trained healthcare attendants who could use and run ventilators skillfully.

Simultaneously, the purchasers and consumers of medical devices too would have their expectations from the upcoming budget.

Expectations from the purchasers’ standpoint

These expectations would include again easy loan availability at low interest rates, incentivizing of investment benefits by giving 200% weightage to investments made for purchase of medical devices, increasing of double depreciation rates on investment for capital goods, reducing GST rates on services offered and boosting the finances of medical facility and service providers such as hospitals, clinics, health centres, diagnostic centres and nursing homes.

Therefore, as would most other industries do, the medical device industry has a lot of expectations from the budget 2022. To what extent their expectations and demands get fulfilled remains to be seen. We are merely days away from knowing how the budget would play out for the medtech sector as well as the consumers.

(The author is Founder & CEO, Max Ventilator. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)